The impact of digital finance on agricultural entrepreneurship

Purpose Agricultural entrepreneurship is crucial for mitigating rural income inequality and advancing agricultural modernization, but it faces persistent credit constraints and exogenous natural risks. Although extant literature establishes digital finance's promotion of entrepreneurial activities, its sector-specific effects on agricultural entrepreneurship remain insufficiently investigated. This study investigates whether digital finance from BigTech firms alleviates financing constraints to promote agricultural entrepreneurship in China, addressing climate vulnerability and financial exclusion barriers. Design/methodology/approach We first develop a two-period occupational choice model identifying three mechanisms through which digital finance influences agricultural entrepreneurship: mitigating information asymmetry, improving risk resilience and increasing household wealth endowment. And we then conduct an empirical analysis using the Peking University Digital Financial Inclusion Index of China (PKU_DFIIC) and firm registration data. Findings We find that a one-standard-deviation increase in digital finance index raises agricultural entrepreneurship density by 6.5%. Mechanism analyses robustly validate three pathways: digital finance reduces lending cost, enhances risk resilience and increases household wealth, primarily through insurance, investment and credit investigation services. Originality/value Firstly, we pioneer a theoretical framework integrating digital finance with agricultural entrepreneurship constraints, specifically modeling how digital finance mitigates information asymmetry, climate vulnerability and collateral scarcity. Secondly, this research focuses on agricultural entrepreneurship, addressing sector-specific barriers like production cycles and disaster exposure. Thirdly, our findings demonstrate how digital finance alleviates specific constraints in the agricultural sector, providing policymakers with pathways to design targeted financial products for agricultural modernization.