The Impact of Bank-Enterprise Proximity on Urban Innovation and Entrepreneurship in China: The Moderating Effects of Digitalization Level and Government Support

Innovation and entrepreneurship are core drivers of high-quality economic development; however, their inherent characteristics, high risk, heavy investment, and slow return, significantly constrain efficiency in the spatial allocation of financial capital. Difficult and expensive financing has long been a key bottleneck restricting the high-quality development of innovation and entrepreneurship in China. As the primary financing channel for enterprises, bank credit efficiency is strongly influenced by geographical distance: Bank-enterprise proximity can alleviate information asymmetry, reduce transaction costs, and ultimately strengthen financial support for innovation and entrepreneurship. However, against the backdrop of rapid digital finance development weakening spatial constraints and continuous government Research and Development (R&D) investment shaping the innovation ecosystem, the impact of bank-enterprise proximity on the quality of urban innovation and entrepreneurship is not a simple linear relationship. Its effectiveness may exhibit heterogeneity with changes in institutional environments and resource conditions. Existing studies have neither fully clarified the internal logic of this nonlinear relationship nor sufficiently addressed the boundary-setting role of government R&D investment. Based on this, from the perspective of financial geography, this study used panel data of 213 prefecture-level and above cities in China from 2003 to 2020. Various empirical methods, including baseline regression, threshold effect modeling, heterogeneity analysis, and robustness tests, were comprehensively applied to systematically explore the impact of bank-enterprise geographical proximity on the quality of urban innovation and entrepreneurship, verify the internal mechanisms of financial support, and identify the threshold effect of government R&D investment. Bank-enterprise proximity significantly promoted the quality of urban innovation and entrepreneurship, and this finding remained robust after controlling for endogeneity. Government R&D investment exerted a significant single-threshold moderating effect on this relationship, with a threshold value of 23.3% (measured as the sum of scientific and educational expenditure as a share of total general public budget expenditure). Only when R&D investment exceeded this threshold did the enabling effect of bank-enterprise proximity became significantly amplified; when investment was insufficient, the effect was insignificant. The level of digitalization also presented a single-threshold characteristic: Below the threshold, traditional bank-enterprise geographical proximity played a dominant role, whereas above the threshold, digital finance supplemented geographical proximity by improving information transmission efficiency and replacing its core position. In terms of heterogeneity, in the context of high R&D investment, the promoting effect of bank-enterprise proximity was the most prominent in eastern regions and in super-large or mega cities, followed by central regions and large cities, while it was relatively weak in western regions and medium and small cities owing to weak economic foundations and insufficient resource agglomeration. Further mechanism tests confirmed that alleviating corporate financing constraints was the key channel through which bank-enterprise proximity operated. The academic value of this study is reflected in three dimensions: First, focusing on the new characteristics of the financial geography structure in the digital era, this study verifies the continued importance of bank-enterprise proximity against the background of weakened spatial constraints, enriching the interdisciplinary research in financial geography and innovation economics. Second, this study is the first to identify the single-threshold moderating effect of government R&D investment, clarifying the boundary conditions of the nonlinear relationship between bank-enterprise proximity and innovation and entrepreneurship quality, and providing new empirical support for reconciling divergent conclusions in existing studies. Third, this study constructs a multi-dimensional integrated analytical framework of "government factor (R&D investment)-technological factor (digitalization)," deepening the systematic understanding of the driving mechanism of urban innovation and entrepreneurship quality. At the practical level, this study provides clear implications for local governments to formulate relevant policies. Governments should shorten bank-enterprise distance by optimizing the spatial layout of bank branches, increase R&D investment to exceed the critical threshold of 23.3%, promote the deep integration of digital finance and traditional banking, and strengthen policy support for central and western regions and for medium or small cities. These measures can jointly enhance the synergistic effectiveness of financial support and government intervention in boosting the high-quality development of innovation and entrepreneurship.