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Internal regulatory technology (RegTech) and bank liquidity risk: evidence from Chinese listed banks

Author

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  • Yufei Xia
  • Xuyan Lu
  • Ziming Hao
  • Huiyi Shi

Abstract

We examine the effect of internal regulatory technology (RegTech) on bank liquidity risk. Based on a dataset of Chinese listed banks from 2015 to 2022, we initially employ a text-mining method to build the internal RegTech index from the banks’ annual reports. We subsequently reveal a significant mitigation effect of internal RegTech on bank liquidity risk. The finding remains robust after alleviating the endogeneity issue and under alternative proxy of the dependent variable and different sample periods. A possible channel is that internal RegTech boosts the regulatory capability and mitigates banks’ risky behaviours. Moreover, our results demonstrate some heterogeneities across RegTech subindices. The compliance and technological foundations subindices are more profound in affecting bank liquidity risk. The findings provide valuable implications for financial regulators regarding the adoption of RegTech.

Suggested Citation

  • Yufei Xia & Xuyan Lu & Ziming Hao & Huiyi Shi, 2026. "Internal regulatory technology (RegTech) and bank liquidity risk: evidence from Chinese listed banks," Applied Economics Letters, Taylor & Francis Journals, vol. 33(7), pages 939-944, April.
    • Handle: RePEc:taf:apeclt:v:33:y:2026:i:7:p:939-944
    DOI: 10.1080/13504851.2024.2400310
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