Digital financial development and commercial bank stability

In today's economically globalized and rapidly evolving IT landscape, digital finance has emerged as a key driver in the financial sector. This research evaluates the stability of commercial banks by analyzing their profitability and risk-taking capacity, while also exploring the effects of digital financial development (DFD) on this stability. The outcomes suggest that DFD enhances both profitability and risk-taking capacity of commercial banks, ultimately strengthening their overall stability. Notably, operational efficiency plays a facilitating role in this process. Additionally, the study uncovers regional and size-based differences in the impact of DFD on commercial bank stability. Upon conducting robustness and endogeneity checks, the findings remain consistent, affirming the universal applicability and credibility of digital finance in bolstering commercial bank stability. These discoveries provide essential theoretical support and practical advice for strategic planning and policy-making in the digital finance era for commercial banks.