Impact of E-Invoicing on Credit Financing of Small Businesses: Evidence from China’s E-invoicing Reform

Enhancing access to credit is a key policy objective for governments aiming to support small business development. Using semi-annual data from 2016 to 2021 for small and medium enterprises (SMEs) listed on China’s New Third Board, this study examines the impact of China’s digital invoicing reform on the debt financing of SMEs by employing a difference-in-differences (DiD) approach. The findings indicate that electronic invoicing (e-invoicing) significantly enhances SMEs’ access to credit, particularly for long-term loans. Mechanism analysis shows that this effect is not derived from conventional channels such as cash flow relief or benefits from debt tax shields. Instead, it originates from a reduction in institutional transaction costs and improvements in financial transparency, facilitated by the e-invoicing system, which strengthens firms’ creditworthiness. Furthermore, heterogeneity analysis reveals that this effect is more pronounced for firms facing greater financial constraints, operating in upstream industries, under private ownership, and within the manufacturing sector. JEL : G21; H25; L26; O33