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Can digital transformation of commercial banks reduce green credit risks?

Author

Listed:
  • Zhang, Yujin
  • Ye, Shujun
  • Liu, Jie
  • Zhang, Lulu
  • Li, Jiayi

Abstract

This paper empirically examines the impact of commercial banks' digital transformation on green credit risk using a sample of 120 commercial banks in China from 2013 to 2021. The study reveals that the digital transformation of commercial banks can mitigate green credit risks, with strategic digitalization, business digitalization, and management digitalization all contributing positively to this effect. Among these dimensions, management digitalization plays the most significant role. The digital transformation of commercial banks can enhance digital risk control capabilities, thereby reducing green credit risk through improved risk oversight. Digital transformation can decrease information asymmetry within banks, thereby lowering green credit risk. The more adequate the talent reserve, the stronger the role of commercial banks' digital transformation in mitigating green credit risk. National commercial banks, compared to regional ones, play a more significant role in reducing green credit risk through digital initiatives.

Suggested Citation

  • Zhang, Yujin & Ye, Shujun & Liu, Jie & Zhang, Lulu & Li, Jiayi, 2025. "Can digital transformation of commercial banks reduce green credit risks?," International Review of Financial Analysis, Elsevier, vol. 99(C).
    • Handle: RePEc:eee:finana:v:99:y:2025:i:c:s1057521925000213
    DOI: 10.1016/j.irfa.2025.103934
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