Exacerbation or suppression? Digital transformation and shadow banking activities of non-financial firms

Xiaoqing Zhao and Chen Yao

Finance Research Letters, 2024, vol. 61, issue C

Abstract: Using an unbalanced panel dataset from Chinese non-financial firms spanning 2008–2021, this research explores the relationship between digital transformation and shadow banking. Contrary to expectations, the evidence indicates that digital transformation accelerates shadow banking rather than suppressing it. A result resilient to potential endogeneity, proxy variables, and outlier exclusion. Furthermore, shadow banking exacerbates operational risk, a pattern particularly prominent among firms with underdeveloped digital capabilities, intimating that digital maturity may alleviate the detrimental impacts. This study elucidates the economic repercussions of shadow banking in the digital transformation epoch, yielding valuable insights.

Keywords: Digitalisation; Shadow banking; Operational risk; Non-financial firms (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:61:y:2024:i:c:s1544612323013193

DOI: 10.1016/j.frl.2023.104947

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