Fintech and individual business growth: evidence from China

Purpose This study investigates the causal impact of financial technology (FinTech) development on individual business growth in China. Design/methodology/approach Using county-level administrative and household survey data, this study employs a two-stage least squares (2SLS) approach to address potential endogeneity and identify the causal impact of Fintech. Heterogeneity and mechanism analyses are conducted to identify region-, household- and industry-specific effects and uncover the channels through which FinTech affects individual business entrepreneurship. Findings The results show that a one-standard-deviation increase in the FinTech index leads to an average increase of approximately 985.56 individual businesses and raises the entry rate by 7.74% across Chinese counties. The positive impact of FinTech on individual business growth is more pronounced in non-eastern and rural regions and in sectors such as agriculture, manufacturing and traditional services. Mechanism analysis indicates that Fintech promotes entrepreneurship by relaxing credit constraints, enhancing payment convenience, fostering risk-taking capacity and improving financial literacy. Practical implications The policy implications of this study are as follows: policymakers should adopt regionally tailored digital infrastructure strategies and differentiated financial capacity-building programs to maximize FinTech's entrepreneurial benefits. Underdeveloped areas require investments in basic digital and financial infrastructure, while developed regions should focus on advanced financial services. Strengthening regulatory frameworks and risk-sharing mechanisms is also crucial. Originality/value This study contributes to the literature by providing robust empirical evidence of FinTech’s role in fostering individual business growth. It highlights the importance of digital finance for supporting micro-entrepreneurship, expanding financial inclusion and reducing regional disparities.