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Can digital transformation reduce bank systemic risk? Empirical evidence from listed banks in China

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  • Ting Yao

    (Nanning Normal University)

  • Liangrong Song

    (University of Shanghai for Science and Technology)

Abstract

Digital transformation (DT) is a strategic priority for commercial banks in China. It is important to explore the relationship between DT and bank systemic risk to maintain financial stability and promote high-quality development of banks. Based on the data of China's listed commercial banks from Q3 2010 to Q1 2022, this paper empirically tests the influence mechanism, heterogeneity influence and action channels of DT on bank systemic risk. This paper finds that DT reduces the bank systemic risk. The higher the degree of DT, the lower the bank systemic risk. Innovation effect and cost effect play multiple mediating roles in the reduction of bank systemic risk by DT. The innovation of bank products, sales channels, organizations and other aspects to enhance the competitiveness and income of banks, while reducing the information asymmetry between the supply chain and the industrial chain, taking cost and risk sharing, reduces the bank systemic risk. This paper enriches the research on the impact of bank DT on systemic risk and provides empirical support for bank risk management.

Suggested Citation

  • Ting Yao & Liangrong Song, 2023. "Can digital transformation reduce bank systemic risk? Empirical evidence from listed banks in China," Economic Change and Restructuring, Springer, vol. 56(6), pages 4445-4463, December.
    • Handle: RePEc:kap:ecopln:v:56:y:2023:i:6:d:10.1007_s10644-023-09560-2
    DOI: 10.1007/s10644-023-09560-2
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    2. Riris Shanti & Hermanto Siregar & Nimmi Zulbainarni & Tony, 2023. "Role of Digital Transformation on Digital Business Model Banks," Sustainability, MDPI, vol. 15(23), pages 1-25, November.
    3. Shen, Chuang & Wu, Junyi & Li, Ying & Chen, Qian, 2025. "Does digital transformation improve the cost efficiency of commercial banks? Evidence from China," Finance Research Letters, Elsevier, vol. 73(C).
    4. Chotia, Varun & Alghafes, Rsha & Sharma, Mahak & Virmani, Naveen, 2025. "Chronocraft: unveiling enablers and overcoming barriers in Fintech-driven logistics and supply chain management in the digital era," Technological Forecasting and Social Change, Elsevier, vol. 217(C).

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