Digital Finance and FDI: Spatial Spillover, Moderating Mechanisms, and Regional Heterogeneity Analysis

Abstract

This study examines the impact of digital finance (DF) on foreign direct investment (FDI) using panel data from 30 Chinese provinces (2011-2022). By employing a spatial Durbin model and moderating effect analysis, we identify key mechanisms and spatial patterns. Results indicate that DF significantly boosts local FDI inflows by reducing information asymmetry and improving capital allocation efficiency. Innovation capital and human capital act as positive moderators, enhancing DF’s effect on FDI. Spatial spillovers exhibit a "local agglomeration-peripheral suppression" pattern, driven by factor siphoning and policy competition. Regional heterogeneity reveals the strongest effect in western China, followed by the eastern region, while the central region shows no significant impact due to slower industrial digitization. Among DF dimensions, coverage breadth has the greatest influence, followed by usage depth, with digitization level displaying a lagged effect. The study offers theoretical insights and policy recommendations for optimizing regional FDI strategies.