Housing price, digital finance, and entrepreneurship in urban China

The financial industry has witnessed a continuous evolution due to the swift expansion of digital technology. As a newly emerging platform, digital inclusive finance plays a significant role in changing urban households' behavior in China. This study first constructs a theoretical framework to examine how digital finance influences the traditional housing wealth effect theory, and then employs the China Household Financial Survey and uses a two-stage least squares regression to explore the impacts of housing prices and digital finance on urban entrepreneurship. Our findings suggest that whereas elevated housing prices deter entrepreneurship, digital inclusive finance positively moderates the adverse effect of housing prices on entrepreneurship primarily by alleviating crowding-out mechanisms. Importantly, the moderating role of digital finance is different across types of entrepreneurship, housing ownership and mortgage status, and household socioeconomic characteristics. This study provides significant insights into harnessing the evolution of both housing and technology to promote entrepreneurship, further contributing to urban development.