Economic policy uncertainty and bank stability: the role of digitalization level

This paper employs quarterly data from 102 Chinese commercial banks spanning from 2017Q1 to 2021Q3. Utilizing a panel fixed-effects model, we scrutinize the impact of digitization on the relationship between economic policy uncertainty and the stability of commercial banks. The main research conclusion is that a higher level of digitization can alleviate the negative effects of economic policy uncertainty on the stability of commercial banks. Further research indicates that digitization achieves this effect by improving borrower selection, reducing the cost of risk management, and enhancing profitability. The mitigating effect of digitization varies across different types of commercial banks, different time periods, and different external environments, with a stronger impact observed on state-owned banks, banks in the post-pandemic period, and banks operating in high external pressure environments. Our research results demonstrate for the first time how digitization enhances banks’ resilience to the impact of economic policy uncertainty, providing insights for financial stability and development.

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Publication Details

Journal
Journal of Chinese Economic and Business Studies
Published
2024-12-06
DOI
https://doi.org/10.1080/14765284.2024.2435226
Citations
2
Primary Topic
Banking stability, regulation, efficiency
Type
article
Field-Weighted Citation Impact
1.08
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article

Economic policy uncertainty and bank stability: the role of digitalization level

Chen Zhu, Qing Liu, Yuxia Fu
2 citations
Journal of Chinese Economic and Business Studies
Banking stability, regulation, efficiency
1.08
article

Economic policy uncertainty and bank stability: the role of digitalization level

Chen Zhu, Qing Liu, Yuxia Fu
article en
2 citations

Abstract

This paper employs quarterly data from 102 Chinese commercial banks spanning from 2017Q1 to 2021Q3. Utilizing a panel fixed-effects model, we scrutinize the impact of digitization on the relationship between economic policy uncertainty and the stability of commercial banks. The main research conclusion is that a higher level of digitization can alleviate the negative effects of economic policy uncertainty on the stability of commercial banks. Further research indicates that digitization achieves this effect by improving borrower selection, reducing the cost of risk management, and enhancing profitability. The mitigating effect of digitization varies across different types of commercial banks, different time periods, and different external environments, with a stronger impact observed on state-owned banks, banks in the post-pandemic period, and banks operating in high external pressure environments. Our research results demonstrate for the first time how digitization enhances banks’ resilience to the impact of economic policy uncertainty, providing insights for financial stability and development.

Journal of Chinese Economic and Business StudiesVol. 23(2)
Hefei University of Technology (CN)
Openalex Percentile: Top 19%
Banking stability, regulation, efficiency
1.08
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