The Impact of Sci‐Tech Finance on Bank Risk and Performance: Evidence From China

ABSTRACT This study examines the impact of Sci‐Tech Finance on bank risk and performance in China. Using a comprehensive bank‐level data set covering 160 commercial banks from 2012 to 2023, we construct a bank‐level Sci‐Tech Finance index. The results show that banks with greater engagement in Sci‐Tech Finance exhibit lower risk and higher performance, with the effects being particularly pronounced for regional banks, digitally advanced banks and banks located in less innovative regions. Mechanism analyses suggest that the reduction in risk is driven by improvements in banks' risk management capacity and enhanced diversification of credit portfolios, while the performance gains primarily stem from higher net interest margins and the expansion of noninterest income activities. Overall, these findings highlight the importance of Sci‐Tech Finance at the bank level and provide policy‐relevant insights.