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Can Bank Regulatory Technology (RegTech) Boost Corporate Investment Efficiency? Evidence From Matched Bank–Firm Loan Data

Author

Listed:
  • Yawen Li
  • Yufei Xia
  • Huiyi Shi
  • Na Li
  • Zhengxu Shi

Abstract

Banks are dedicated to serving the real economy. In recent years, regulatory technology (RegTech) has served as a prime focus in the banking sector and may further spillover to external parties. This paper aims to investigate whether bank RegTech enhances corporate investment efficiency (CIE) through its influence on lending activities. Using novel matched bank–firm loan data from 2013 to 2023, we empirically demonstrate that bank RegTech improves CIE. A 1% rise in the standard deviation of bank RegTech corresponds to a maximum of approximately 18.13% improvement in average CIE. Specifically, bank RegTech enhances CIE by mitigating financing constraints, strengthening governance capabilities, and reducing operational risks. The beneficial effects of bank RegTech on CIE are further amplified by information transparency and media coverage, while industry competition weakens this effect. The impact of bank RegTech on CIE exhibits heterogeneous characteristics, varying with different dimensions of bank RegTech and firm‐level characteristics. Our results still hold after alleviating endogeneity concerns and performing robustness checks. Furthermore, we find that improvements in CIE enhance firm performance, stimulate innovation, and promote job creation.

Suggested Citation

  • Yawen Li & Yufei Xia & Huiyi Shi & Na Li & Zhengxu Shi, 2025. "Can Bank Regulatory Technology (RegTech) Boost Corporate Investment Efficiency? Evidence From Matched Bank–Firm Loan Data," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 46(6), pages 3683-3710, September.
    • Handle: RePEc:wly:mgtdec:v:46:y:2025:i:6:p:3683-3710
    DOI: 10.1002/mde.4552
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