Bank financial technology and the governance of zombie firms

This study empirically examines how bank financial technology (FinTech) affects the governance of zombie firms, using data from China’s A-share listed companies from 2007 to 2023. Bank FinTech adoption is shown to significantly curb firm zombification. This effect is pronounced in technology-oriented and operational risk management-oriented FinTech, whereas no significant effect on customer service-oriented FinTech is observed. Mechanism analysis indicates that bank FinTech inhibits zombie firms through reduced information costs, enhanced banking competition and alleviation of government intervention. Heterogeneity analysis further shows that bank FinTech has a more substantial governance effect on state-owned enterprises, regions with well-developed digital infrastructure and regions with stringent financial regulation. Additionally, bank FinTech alleviates financing constraints on non-zombie firms through credit spillover effects. These findings unveil a financial development-level technological pathway for zombie firm governance, offering theoretical underpinnings and policy implications for leveraging FinTech to enhance economic efficiency.