Title:	HOW DOES DIGITAL SOCIAL CREDIT SYSTEM PROMOTE BUSINESS INVESTMENT? AN EMPIRICAL STUDY OF 45 CITIES IN CHINA
Author(s):	Jinghua Yin
ISBN:	978-989-8704-50-4
Editors:	Piet Kommers, Mário Macedo, Guo Chao Peng and Ajith Abraham
Year:	2023
Edition:	Single
Keywords:	Social Credit System, Enterprise Investment, Financing Constraints, Information Disclosure, Contract Breach Cost
Type:	Full
First Page:	251
Last Page:	260
Language:	English
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Paper Abstract:	The Chinese government leads the digital credit system construction, and its strategic intention is to shorten the long process of the market's spontaneous credit system construction and catch up with high-income countries. Whether the digital credit system construction improves investment is crucial to the strategic intention realization. Thus, this study empirically examined the mechanism and effect of the digital SCS (social credit system) on enterprise investment in 49 first, quasi-first-, and second-tier Chinese cities. We used methods of fixed, ML (maximum likelihood method) fixed, and GLS (generalized least squares method) random effects based on relevant data from the China City Business Credit Environment Index, City Statistical Yearbook, Judicial Civilization Index Report, and Open Forest Index Network. The higher the degree of SCS digitization, the larger the scale of enterprise investment. A digitized SCS improves data resource recall efficiency, expands information application, and reduces enterprise financing difficulty, thereby increasing enterprise investment. The "cost reduction" and "policy uncertainty reduction" effects of the digital SCS are not significant. Thus, our study recommends further utilizing SCS's role in facilitating judicial civilization and data opening to enhance the main function of the government in SCS construction, and to improve government-enterprise interaction through digital channels.
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