Digital finance is a mode of financial innovation conducive to raising the level of urban innovation. Using city-level panel data on 268 Chinese cities from 2011 to 2019, this paper investigates the relationship between digital finance and urban innovation with a fixed-effects model. Further, this paper carries out a heterogeneity analysis and studies the impact mechanism of digital finance on urban innovation by constructing a moderating effects model. The empirical results are as follows. First, digital finance can effectively increase urban innovation, but significant differences exist in various dimensions. Second, the heterogeneous impact of digital finance on urban innovation is reflected in cities with different levels of commercial attractiveness. Third, the supply of traditional finance plays a moderating role in the promotional effect of digital finance on urban innovation. These conclusions lead to significant policy implications for cities that aim to use digital finance to optimize their financial system and develop an innovation-driven economy.
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