Governance strategies for the development of digital finance and the enhancement of corporate internal control quality

• Different from the selection perspective of external environmental factors in the past, this paper starts from digital finance, a brand-new financial ecosystem, to explore the impact of the level of financial development on the quality of internal control. • This paper theoretically analyzes and empirically tests the nonlinear effect of financial development on internal control, thereby obtaining the economic consequences of digital finance in the field of accounting and supplementing the literature in the field of financial functions. • This paper further explores the lag effect and cumulative effect of digital finance on internal control. The conclusion is conducive to helping enterprises deal with the frequent occurrence of financial problems caused by poor internal control, and provides a reference for enterprises on how to improve the level of internal governance with the help of digital finance. In recent years, financial violations by listed companies have occurred frequently, casting doubt on the effectiveness of enterprise internal control systems. The issue of how to enhance the quality of internal control has garnered significant attention from the academic community. Changes in the external financial environment are closely linked to the ease with which enterprises can access resources, influencing their business decisions and institutional arrangements, and thereby affecting the level of internal control. Against this backdrop, this study examines listed companies in Guangdong Province traded on the Shenzhen and Shanghai A-share markets between 2013 and 2023, focusing on the transformation of the traditional financial market into digital finance. Conclusion: The findings indicate a positive U-shaped relationship between digital finance and the level of internal control. In the early stages of digital finance development, the improvement of internal control was constrained; however, the negative impact diminished over time due to the cumulative effects of digital finance. This research provides valuable insights for the advancement of digital finance and the enhancement of enterprise internal control quality.

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Publication Details

Journal
Finance research letters
Published
2025-08-15
DOI
https://doi.org/10.1016/j.frl.2025.108178
Primary Topic
FinTech, Crowdfunding, Digital Finance
Type
article
Field-Weighted Citation Impact
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Governance strategies for the development of digital finance and the enhancement of corporate internal control quality

Xi Ma, Ru Zhang
Finance research letters
FinTech, Crowdfunding, Digital Finance
article

Governance strategies for the development of digital finance and the enhancement of corporate internal control quality

Xi Ma, Ru Zhang
article en

Abstract

• Different from the selection perspective of external environmental factors in the past, this paper starts from digital finance, a brand-new financial ecosystem, to explore the impact of the level of financial development on the quality of internal control. • This paper theoretically analyzes and empirically tests the nonlinear effect of financial development on internal control, thereby obtaining the economic consequences of digital finance in the field of accounting and supplementing the literature in the field of financial functions. • This paper further explores the lag effect and cumulative effect of digital finance on internal control. The conclusion is conducive to helping enterprises deal with the frequent occurrence of financial problems caused by poor internal control, and provides a reference for enterprises on how to improve the level of internal governance with the help of digital finance. In recent years, financial violations by listed companies have occurred frequently, casting doubt on the effectiveness of enterprise internal control systems. The issue of how to enhance the quality of internal control has garnered significant attention from the academic community. Changes in the external financial environment are closely linked to the ease with which enterprises can access resources, influencing their business decisions and institutional arrangements, and thereby affecting the level of internal control. Against this backdrop, this study examines listed companies in Guangdong Province traded on the Shenzhen and Shanghai A-share markets between 2013 and 2023, focusing on the transformation of the traditional financial market into digital finance. Conclusion: The findings indicate a positive U-shaped relationship between digital finance and the level of internal control. In the early stages of digital finance development, the improvement of internal control was constrained; however, the negative impact diminished over time due to the cumulative effects of digital finance. This research provides valuable insights for the advancement of digital finance and the enhancement of enterprise internal control quality.

Finance research lettersVol. 85
Industry, innovation and infrastructure
Openalex Percentile: Top 64%
FinTech, Crowdfunding, Digital Finance
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Governance strategies for the development of digital finance and the enhancement of corporate internal control quality — Xi Ma, Ru Zhang · Finance research letters (2025) | TGRS Research Map | TGRS