In a groundbreaking study exploring the intricate dynamics between technological finance, the burgeoning digital economy, and the advancement of regional economies, researchers have unveiled compelling evidence that highlights how these elements interact to shape high-quality economic development across China. Employing robust econometric techniques on a rich dataset spanning 273 cities, the study presents not only the direct impact of Sci-Tech finance but also delves into how the digital economy serves as a pivotal moderator in this relationship, revealing complex nonlinear patterns hitherto underexplored.
The investigation begins by analyzing the moderating role of the digital economy in the nexus of Sci-Tech finance and economic development. Through detailed regression analyses incorporating interaction terms, the findings demonstrate a significant and positive moderating effect of the digital economy on Sci-Tech finance’s capacity to stimulate high-quality economic growth. This suggests that as digital infrastructure and activities intensify, the efficiency and reach of Sci-Tech financial mechanisms become substantially amplified. The national-level results bear this out, with interaction coefficients strongly underscoring the synergistic relationship between these factors.
Disaggregating the data by region uncovers fascinating spatial heterogeneity. In China’s eastern and western regions, the interaction between Sci-Tech finance and the digital economy remains significantly positive. The eastern region’s advanced digital ecosystem and well-established scientific innovation infrastructure form a fertile ground for the intertwined growth of technology financing and economic quality. Meanwhile, the western region’s recent strategic investments and catch-up growth in digital economic capabilities explain the rising synergy seen there, further reinforcing the critical role of digital transformation even in relatively underdeveloped areas. Contrarily, the central region displays no significant interaction effect, indicating regional disparities in how these forces coalesce to drive economic progress.
Understanding the temporal dynamics, the study further probes the lagged effects of Sci-Tech finance and the digital economy on economic quality. Recognizing that financial innovation and digital economic development are not instantaneous in their outcomes, the researchers introduce lagged variables into their models. Remarkably, the results show that the moderating impact of the digital economy persists over time, retaining significance even when variables are lagged by one or two periods. This enduring effect highlights that policies fostering digital infrastructure and Sci-Tech financial development are likely to yield sustained benefits, accentuating the importance of long-term strategic planning in economic governance.
Venturing beyond linear assumptions, the authors conduct an insightful threshold effect analysis to capture the nonlinearities in the interplay between Sci-Tech finance, the digital economy, and high-quality development. This analytical approach identifies two critical threshold values in the digital economy index — at 0.058 and 0.275 — at which the influence of Sci-Tech finance undergoes distinct changes. The double-threshold model is statistically robust, excluding a third threshold due to lack of significance, and implying a nuanced stage-dependent interaction rather than a uniform trend.
Interpreting the threshold results reveals that when digital economic development is very low (below 0.058), Sci-Tech finance significantly promotes economic quality, with a relatively strong positive coefficient. This suggests that even minimal digital infrastructure can enable Sci-Tech finance mechanisms to contribute positively, perhaps due to fundamental modernization effects or initial capacity building. As the digital economy matures into the mid-level range (between 0.058 and 0.275), the magnitude of Sci-Tech finance’s impact diminishes, though it remains statistically significant. This dip might reflect transitional phases where digital systems are evolving but have not yet reached the capacity to fully leverage Sci-Tech financial inputs.
Intriguingly, at a high level of digital economic development (above 0.275), the influence of Sci-Tech finance re-intensifies markedly. Here, the impact coefficient leaps to its highest value, underscoring that a well-developed digital ecosystem can unleash the maximum potential of Sci-Tech financial activities to propel high-quality economic progress. This resurgence points to the integral role of advanced digital integration in amplifying the effectiveness of financial innovations dedicated to science and technology sectors, likely through enhanced data flows, connectivity, and innovation diffusion mechanisms.
Synthesizing these multifaceted findings, the study challenges simplistic narratives about the linear benefits of the digital economy on regional development. Instead, the relationship is more complex and exhibits what can be described as a “U-shaped” dynamic, where the positive impact of Sci-Tech finance is robust at both ends of digital economic maturity but somewhat muted in the intermediate stage. This nonlinearity provides crucial insights for policymakers, signaling that targeted investments must be attuned not only to the presence of digital infrastructures but also to the stages of their evolution.
Moreover, the research reinforces the indispensable role of regional context in shaping economic outcomes. The varying strength of moderating effects across China’s vast territory emphasizes that development strategies must be tailored, recognizing that eastern coastal areas with advanced ecosystems differ fundamentally from central and western counterparts. The findings advocate for differentiated approaches that consider existing digital economic levels and infrastructure maturity, ensuring that Sci-Tech finance interventions align with local capacities and potentials.
The temporal persistence of moderating impacts also holds salient policy implications. Given that benefits accrue and compound over time, short-term assessments of digital economy initiatives or Sci-Tech financial reforms may underestimate their true value. Sustainable growth pathways depend on consistent support for digital infrastructure, talent development, and financial innovation, reinforcing the call for long-term commitments by governmental and private sectors alike.
On a methodological front, the integration of interaction terms, lagged variable models, and threshold regression techniques exemplifies the advanced econometric rigor underlying the conclusions. The use of a large-scale panel dataset covering hundreds of cities provides robustness and generalizability, while the nuanced regional and temporal analyses add layers of depth rarely achieved in such studies. This comprehensive analytical framework sets a benchmark for future inquiries into innovation financing and digital economies.
Ultimately, this research reveals a compelling blueprint for achieving high-quality economic development in an increasingly digitized world. By illuminating the multifaceted pathways through which the digital economy interacts with Sci-Tech finance, it underscores a strategic imperative: fostering digital infrastructure and innovation financial systems in tandem can catalyze superior economic outcomes, but the approaches must be dynamically adaptive to regional characteristics and developmental stages.
In conclusion, the empirical evidence provided invites a rethinking of investment and policy priorities in China and beyond. It suggests that the digital economy is not merely an auxiliary factor but a fundamental enabler that modulates the efficacy of Sci-Tech finance, with implications that echo throughout the spheres of innovation policy, urban planning, and economic modernization. Future research directions could further explore sector-specific effects, international comparisons, and micro-level mechanisms underpinning these macro patterns.
As global economies continue to embrace digital transformation, understanding the subtleties documented in this study becomes pivotal. Stakeholders ranging from government officials to industry leaders must recognize that the relationship between digital ecosystems and innovation financing is complex, evolving, and regionally differentiated, necessitating policies that are both flexible and forward-looking. The promise of high-quality, sustainable growth hinges on mastering these intertwined forces.
The interplay of Sci-Tech finance and the digital economy thus emerges as a dynamic engine for contemporary economic revitalization. Harnessing their synergistic potential, as detailed in this comprehensive investigation, could unlock new heights in productivity, inclusivity, and innovation-driven development, charting a course for resilient and prosperous futures worldwide.
Subject of Research: The interaction between Sci-Tech finance, the digital economy, and high-quality economic development in regional economies.
Article Title: Sci-Tech finance, digital economy and high-quality development of regional economy: empirical evidence from 273 cities in China.
Article References:
He, J., Chen, Y., Chen, H. et al. Sci-Tech finance, digital economy and high-quality development of regional economy: empirical evidence from 273 cities in China. Humanit Soc Sci Commun 12, 1425 (2025). https://doi.org/10.1057/s41599-025-05033-1
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