We examine how fintech development affects corporate innovation. Using the city-level fintech index that includes 331 cities, which is constructed based on data from Ant Finance Service Group, we identify the economic mechanisms through which fintech development affects technological innovation. We show that firms that are more financially constrained exhibit a disproportionally higher innovation level in cities with better developed fintech services. We further find that fintech development promotes lending to firms and stimulates R&D investment because internet credit intensifies bank loan competition. Our paper provides new insights into the effects of fintech development on the real economy.

We document issuance overpricing of corporate debt securities in China, which is robust across subsamples with different credit ratings, maturities, and issuers. This phenomenon contrasts with underpricing of equity and debt securities in Western countries and reflects China's distinct institutional environment. The average overpricing dropped from 7.44 basis points to 2.41 basis points after the government prohibited underwriters from using rebates in issuances in October 2017. By analyzing overpricing before and after the rebate ban and across different issuers and underwriters, we uncover two channels for underwriters, who compete for future underwriting business, to drive up overpricing: rebates and self-purchases.