Bank credit in the digital age: Expansion or excessive expansion?

Wenyang Wu and Shenfeng Tang

Finance Research Letters, 2024, vol. 70, issue C

Abstract: This study demonstrates that digitalisation greatly facilitates the growth of credit, but does not result in rapid and unsustainable increase. The mechanism tests demonstrate that the influence of digitalisation on the growth of credit is accomplished by reducing the danger of bad debt after a loan and increasing the desire for risk before the loan. Upon further examination, it is evident that digitalisation has facilitated the growth of credit in the real economy while inhibiting the growth in the virtual economy. This study contributes to the existing literature on the nexus between digitalisation and loan allocation.

Keywords: Digitalisation; Credit expansion; Risk preference; Banks (search for similar items in EconPapers)
JEL-codes: G18 G21 G28 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:70:y:2024:i:c:s1544612324014235

DOI: 10.1016/j.frl.2024.106394

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