Changing the impact of banking concentration on corporate innovation: The moderating effect of digital transformation

This study explores the moderating effects of digital transformation on the nexus between banking concentration and corporate innovation. Based on the panel data of Chinese A-share companies listed on the mainland stock exchanges, such as Shenzhen Stock Exchange and Shanghai Stock Exchange, from 2008 to 2019, the moderated mediation effect models show that digital transformation suppresses the negative impact of banking concentration on corporate innovation by reducing financing constraints. The scale heterogeneity analysis suggests that digital transformation weakens the direct effect of banking concentration on corporate innovation in SMEs and the indirect effect of financial constraints in non-SMEs. Compared to high-tech companies, digital transformation in non-high-tech companies has greater moderating effects on corporate innovation. This study provides a new perspective using which companies can proactively reduce the impact of banking concentration on innovation.