Does e‐Commerce Lead to Private Enterprises Being Diverted Out of the Real Economy? Evidence From China

ABSTRACT The study employs a difference‐in‐differences method, utilizing panel data from 289 prefecture‐level cities in China from 2003 to 2021 to analyze the impact of e‐commerce pilot city policy on the “substantial to fictitious” transformation of private enterprises' economies. Research finds that, first, when a city becomes a national e‐commerce pilot city, it significantly enhances the financialization level of private enterprises. Second, the e‐commerce pilot city policy has a greater promoting effect on the financialization level of enterprises in industries with intense competition, first‐tier and second‐third‐tier cities, and regions with higher degrees of marketization. Third, the construction of an e‐commerce pilot city policy affects the financialization level of enterprises by alleviating financing constraints, enhancing the perception of economic uncertainty for enterprises, and reducing internal control quality. As for the main contributions of this article, first, it provides empirical evidence for whether it is reasonable for the current government to introduce preferential policies to promote the development of the real economy; second, it helps to deepen the understanding of the effectiveness of the “National E‐Commerce Pilot City” policy in the real economy in recent years; third, it provides policy inspiration for further preventing excessive financialization of enterprises and helping the private economy “moving from virtual to real.”