Risk culture of banks and corporate innovation: Evidence from Chinese listed companies

Kun Xu, Jie Liu, Zhong-lu Teng and Weicheng Wang

International Review of Economics & Finance, 2024, vol. 94, issue C

Abstract: The importance of risk culture in the banking sector was highlighted after the 2008 financial crisis. Chinese companies often turn to commercial bank loans, which serve as an important source of financing, to acquire the necessary funds for corporate innovation. Quantitative text analysis of the annual reports of Chinese banks was used to measure their risk culture. By analyzing a firm's loan statement, we were able to identify the bank that provided the loan. This study examines the impact of banks' risk culture on corporate innovation using a fixed-effects model, with Shanghai and Shenzhen A-share listed companies from 2016 to 2020 as the research sample. In addressing the endogenous problem of banks' risk culture, this paper adopts an instrumental variable approach using population migration and dock culture, and tests the robustness through the IV-2SLS method. The study finds that emphasizing the development of risk culture within the bank promotes corporate innovation. Entrepreneurial innovation is influenced by risk culture through debt management, a critical mechanism.

Keywords: Risk culture; Corporate innovation; Bank loan; Text analysis (search for similar items in EconPapers)
JEL-codes: G21 M14 O31 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:94:y:2024:i:c:s1059056024003691

DOI: 10.1016/j.iref.2024.103377

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