Asymmetric effects of internet penetration on high-quality financial development in a resource-depleted Chinese city: Evidence from Jiaozuo

Abstract

This study investigates the asymmetric effects of internet development on high-quality financial development in resource-exhausted cities, with Jiaozuo serving as a representative case. Jiaozuo is selected as a representative case due to its status as a typical resource-exhausted city undergoing institutional and economic transformation. It challenges the conventional assumption that digital expansion uniformly enhances financial performance in structurally constrained environments. Employing a Nonlinear Autoregressive Distributed Lag (NARDL) model on annual data from 2000 to 2023, the analysis decomposes internet penetration into positive and negative changes to examine their differential impacts on a composite index of financial development quality. R&D intensity, economic openness, income level, are incorporated as control variables. The results show that positive internet shocks do not have a statistically significant impact on high-quality financial development, while negative shocks, although causing short-term disturbances, are conducive to long-term institutional adaptation and systemic improvements. According to the results, policies should prioritize institutional capacity building and digital financial literacy over indiscriminate infrastructure expansion, consistent with the Sustainable Development Plan for Resource-Exhausted Cities from 2025-2027. Reforms in financial governance and sustained innovation support are essential to advance digital-financial integration, in alignment with the 14th Five-Year Plan for Digital Economy Development for 2028-2035 targets.