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Firm digitalization and bank lending: Evidence from China

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  • Cao, Lihong
  • Zhu, Xuanning
  • Li, Yi

Abstract

This paper examines how firm digitalization influences bank loans and debt maturity using data from Chinese-listed firms from 2009 to 2021. By employing machine learning and large language models to measure digitalization, we find that digitalization significantly increases both the scale of bank loans and the proportion of long-term loans. The effect of digitalization is stronger for credit and guaranteed loans than for collateral loans, indicating that digitalization reduces the collateral requirements in lending. Mechanism analysis reveals that digitalization enhances firms’ access to bank lending by improving information transparency, financial stability and corporate reputation. The positive effect is stronger for firms without credit ratings, highlighting digitalization’s role in reducing information asymmetry. Additionally, the effects are more pronounced in regions with advanced banking systems and marketization, for firms in traditional industries and firms under competitive pressure. Our findings highlight digitalization’s critical role in improving firms’ credit market competitiveness and advocate for government policies to facilitate firm digitalization. It offers actionable insights for firms in bank-dominated economies globally to alleviate financial constraints through technological development.

Suggested Citation

  • Cao, Lihong & Zhu, Xuanning & Li, Yi, 2026. "Firm digitalization and bank lending: Evidence from China," Research in International Business and Finance, Elsevier, vol. 82(C).
    • Handle: RePEc:eee:riibaf:v:82:y:2026:i:c:s0275531925004830
    DOI: 10.1016/j.ribaf.2025.103227
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