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What Constrains Bank Rent-Seeking: Firm's Carbon Disclosure Quality or Digital Transformation?

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  • Gan, Xiaojun
  • Hui, Wang

Abstract

Based on data from China’s A-share listed firms between 2008 and 2022, this study empirically investigates the impact of carbon disclosure quality and digital transformation on bank rent-seeking behavior, along with the mechanisms through which these effects occur. The findings indicate that higher carbon disclosure quality significantly suppresses firms’ rent-seeking in credit markets. Further analysis reveals a non-linear U-shaped relationship between digital transformation and rent-seeking: moderate levels of digitalization reduce rent-seeking through improved transparency and governance, while excessive digital adoption may enable strategic obfuscation and opportunistic financing. Mechanism analysis shows that the negative effect of carbon disclosure is more pronounced in firms with higher R&D expenditure, whereas profitable firms are more likely to leverage disclosure for bargaining purposes. Heterogeneity analysis demonstrates that state-owned enterprises (SOEs) respond more strongly to carbon disclosure, exhibiting greater reductions in rent-seeking than non-SOEs, due to their heightened exposure to political and regulatory oversight. Moreover, the effect of carbon disclosure is significantly stronger among younger firms, suggesting that disclosure serves as a more effective governance and signaling mechanism for firms with limited operational history and weaker banking ties.

Suggested Citation

  • Gan, Xiaojun & Hui, Wang, 2025. "What Constrains Bank Rent-Seeking: Firm's Carbon Disclosure Quality or Digital Transformation?," Finance Research Letters, Elsevier, vol. 86(PE).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pe:s1544612325019725
    DOI: 10.1016/j.frl.2025.108718
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    References listed on IDEAS

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    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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