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Banking evolution in the digital age: How digital financial inclusion induces systematic financial risk?

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  • Xie, Junming

Abstract

Using panel data from 16 Chinese commercial banks (2011–2022), this study investigates the relationship between digital financial inclusion (DFI) and systemic financial risk. Findings reveal that DFI dimensions differentially affect systemic risk—service depth and digitalization significantly increase risk, while geographical coverage has minimal impact. We identify leverage level and administration costs as critical mediating mechanisms, while capital adequacy and liquidity management capability serve as significant moderating factors. These findings underscore the theoretical underpinnings and regulatory implications of balancing financial innovation with stability in rapidly changing digital landscapes.

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  • Xie, Junming, 2025. "Banking evolution in the digital age: How digital financial inclusion induces systematic financial risk?," Finance Research Letters, Elsevier, vol. 80(C).
    • Handle: RePEc:eee:finlet:v:80:y:2025:i:c:s1544612325006129
    DOI: 10.1016/j.frl.2025.107351
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