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Robo-advisory services and bank risk: Evidence from Chinese commercial banks

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  • Wu, Chen
  • Dong, Zhiyong

Abstract

This study examines the impact of robo-advisory services on the risk-taking behavior of Chinese commercial banks, and finds evidence that the adoption of robo-advisory significantly increases bank risk. Mechanism analyses reveal that this increased risk stems from concurrent shifts: while enhancing off-balance-sheet income, robo-advisory is associated with a deceleration in stable long-term personal deposit growth and an increased reliance on interbank funding. These changes amplify liquidity and maturity mismatch risks. Furthermore, heterogeneity analyses indicate that this risk amplification is particularly pronounced for banks with lower initial liquidity, higher major shareholder ownership, and those operating in regions with more developed information technology infrastructure. Our findings highlight the critical need for banks to strengthen liquidity and behavioral monitoring when expanding fintech services to mitigate emergent structural and systemic risks.

Suggested Citation

  • Wu, Chen & Dong, Zhiyong, 2025. "Robo-advisory services and bank risk: Evidence from Chinese commercial banks," Finance Research Letters, Elsevier, vol. 86(PA).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pa:s1544612325015508
    DOI: 10.1016/j.frl.2025.108296
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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