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Climate transition risk and bank risk-taking: The role of digital transformation

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  • Liu, Zhonglu
  • Li, Jun
  • Sun, Haibo

Abstract

Using data of Chinese commercial banks from 2010 to 2020, this paper empirically examines the role of digital transformation (DT) in moderating the impact of climate transition risk (CTR) on bank risk-taking. The results show that DT effectively restrains the impact of CTR on bank risk-taking. In addition, the moderating effect of DT is more prominent for small-scale banks, banks with a high concentration of high-carbon industry loans, and banks with low DT. These findings highlight the need for banks to undertake DT and provide supporting evidence for banks to address CTR through DT.

Suggested Citation

  • Liu, Zhonglu & Li, Jun & Sun, Haibo, 2024. "Climate transition risk and bank risk-taking: The role of digital transformation," Finance Research Letters, Elsevier, vol. 61(C).
    • Handle: RePEc:eee:finlet:v:61:y:2024:i:c:s1544612324000588
    DOI: 10.1016/j.frl.2024.105028
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    8. Zhu, Yuxuan & Liu, Yike & Zhou, Ye & Xing, Xiaoyun & Wang, Xiuya, 2025. "Correlation among climate risk, climate policy uncertainty, and carbon-intensive stock markets in China," Finance Research Letters, Elsevier, vol. 75(C).
    9. Sulong, Zunaidah & Fuszder, Md. Habibur Rahman & Abdullah, Mohammad & Abakah, Emmanuel Joel Aikins, 2025. "Cybersecurity risk and bank risk-taking," Journal of Behavioral and Experimental Finance, Elsevier, vol. 47(C).
    10. Huynh, Japan, 2025. "Digital transformation under the pressure of uncertainty in the banking sector," Economic Analysis and Policy, Elsevier, vol. 86(C), pages 559-575.
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    14. Japan Huynh, 2025. "Digital Transformation and Bank Liquidity Creation: Evidence From a Bank-Based Market," SAGE Open, , vol. 15(4), pages 21582440251, October.

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