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Do online judicial auctions matter for bank risk-taking? Evidence of Chinese commercial banks

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  • Jiang, Hai
  • Chen, Shuangyi
  • Chen, Peng

Abstract

Our paper examines the impact of online judicial auctions (OJAs) on bank risk-taking by developing a theoretical model and providing empirical evidence from data on China’s commercial banks over the period 2010–2021. Using unique regional OJA data, we find that the implementation of OJAs contributes positively to banks’ stability, with results remaining valid across endogeneity tests and robustness checks. This stabilizing effect is particularly pronounced for local banks and intensifies as auctions progress. Banks burdened by non-performing loans and those with weaker risk mitigation capacity derive greater benefits from OJAs. Our analysis further reveals complementary effects between OJAs and non-performing asset marketization. We document the mechanisms contributing to the positive effect of OJAs, including improving judicial efficiency and strengthening banks’ ability to manage profitability and maintain adequacy.

Suggested Citation

  • Jiang, Hai & Chen, Shuangyi & Chen, Peng, 2026. "Do online judicial auctions matter for bank risk-taking? Evidence of Chinese commercial banks," Research in International Business and Finance, Elsevier, vol. 83(C).
    • Handle: RePEc:eee:riibaf:v:83:y:2026:i:c:s027553192500529x
    DOI: 10.1016/j.ribaf.2025.103273
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