Digital Finance Development Driven by Information Technology:A Perspective on Firms' Money Demand Management

Advancements in information technology have spurred financial innovation, particularly through the development of big data, artificial intelligence, blockchain, and cloud computing. These technologies have merged with traditional finance, leading to the emergence of digital finance. Digital finance is promoting the innovation of financial products and transaction mechanisms, improving the allocation efficiency of financial resources, and providing enterprises with diversified products and services, which may affect firms' money demand. In this study, we empirically investigate the impact of digital finance on firms' money demand using data on Chinese A stock companies between 2011 and 2020. Our findings reveal the following: First, digital finance increases firms' overall money demand, as well as their transactional and speculative money demand. Second, digital finance strengthens the influence of monetary policy on firms' money demand, particularly through the interest rate transmission channel. This study is of significant practical importance for understanding the relationship between digital finance and firms' money demand, and for enhancing the management of firms' monetary needs.