Abstract: Based on the data from the 14th National Survey of Private Enterprises, this study examines the impact and mechanism of digital transformation on new investment in private enterprises. The research finds that digital transformation significantly promotes the scale and expectations of new investment in private enterprises. After a series of robustness tests, this conclusion still holds true. Mechanism analysis shows that digital transformation promotes new investment internally by boosting entrepreneurs' confidence in development as well as strengthening their awareness of opportunities, and externally by reducing institutional transaction costs and repayment pressure. Heterogeneity test shows that this driving effect is stronger in larger enterprises, start-up enterprises, non-big data experimental zone enterprises, and non-key technology industry enterprises. Performance test shows that digital transformation can drive revenue growth through new investment. The conclusion provides decision support and empirical basis for the government to activate private investment in the context of the digital economy.
