Digital Government Construction and Inter-regional Capital Flows: Based on The Perspective of Inter-regional Mergers and Acquisitions

Accelerating a unified national market construction requires further promotion of inter-regional capital flows. This paper examines the impact of digital government construction (DGC) on inter-regional capital flows. The result shows that DGC can promote inter-regional capital flows and facilitate inter-regional mergers and acquisitions (M&As) of local enterprises. In the case where the geographical and cultural distance between the acquiring and target party is relatively large, the acquiring party is a state-owned enterprise, and the acquiring party belongs to the service industry and the eastern and central regions, the promotion effect of digital government construction is more significant. Mechanism result shows that DGC could reduce institutional friction and enhance resource access for inter-regional M&As. Moreover, DGC can motivate local enterprises’ inter-regional M&As towards regions with relatively low levels of DGC, exhibiting a positive spatial spillover effect. When the overall level, subdivision dimensions, and the expenditure ratio of general public service categories of the DGC in acquiring city are higher than those in target city, this effect is more significant. The results verify the techno-economic paradigm theory of the digital economy development, provide a new perspective for the study of inter-regional capital flows, and increase empirical evidence support for the construction of a unified national market.