Can digital transformation reduce bank systemic risk? Empirical evidence from listed banks in China

Ting Yao () and Liangrong Song ()
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Ting Yao: Nanning Normal University
Liangrong Song: University of Shanghai for Science and Technology

Economic Change and Restructuring, 2023, vol. 56, issue 6, No 27, 4445-4463

Abstract: Abstract Digital transformation (DT) is a strategic priority for commercial banks in China. It is important to explore the relationship between DT and bank systemic risk to maintain financial stability and promote high-quality development of banks. Based on the data of China's listed commercial banks from Q3 2010 to Q1 2022, this paper empirically tests the influence mechanism, heterogeneity influence and action channels of DT on bank systemic risk. This paper finds that DT reduces the bank systemic risk. The higher the degree of DT, the lower the bank systemic risk. Innovation effect and cost effect play multiple mediating roles in the reduction of bank systemic risk by DT. The innovation of bank products, sales channels, organizations and other aspects to enhance the competitiveness and income of banks, while reducing the information asymmetry between the supply chain and the industrial chain, taking cost and risk sharing, reduces the bank systemic risk. This paper enriches the research on the impact of bank DT on systemic risk and provides empirical support for bank risk management.

Keywords: DT; FinTech; Bank systemic risk; CoVaR; Innovation (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s10644-023-09560-2

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