The Influence of asset size during digital transformation on the economic efficiency of banks

This study examines how asset size influences the effectiveness of digital transformation initiatives in Chinese commercial banks. Despite substantial investments in digital technologies across the banking sector, transformation outcomes exhibit significant heterogeneity, prompting investigation into institutional characteristics that moderate effectiveness. Using panel data from 37 Chinese commercial banks categorized by asset size, this research employs fixed-effects regression models to analyze the relationship between digital transformation intensity and return on equity. Digital transformation is quantified through systematic textual analysis of annual reports, constructing a comprehensive index capturing transformation intensity. The empirical findings reveal that while digital transformation generally enhances banking performance, asset size significantly moderates this relationship. Large banks (assets exceeding 2 trillion yuan) demonstrate a positive transformation coefficient of 2.038, medium banks (300 billion -2 trillion yuan) exhibit an even stronger coefficient of 4.584, while small banks (below 300 billion yuan) show a negative coefficient of - 0.122. These heterogeneous outcomes are attributable to resource-dependent implementation capabilities, with larger institutions benefiting from economies of scale, superior talent acquisition, and comprehensive implementation frameworks. Medium-sized institutions potentially achieve optimal balance between resource adequacy and operational flexibility, explaining their pronounced transformation efficacy. The SA Bank case study provides contextual validation, demonstrating substantial performance improvements following digital implementation across multiple dimensions. This research contributes to strategic consistency theory, IT capability framework, and resource-based perspectives by identifying asset size as a critical moderator of transformation success, providing practical insights for banking executives and regulators regarding asset-appropriate digital strategies.