| China’s banking sector,for a considerable time,has been the driving force behind the country’s economy,its actions having a considerable impact.The global financial crisis of2008 has been a devastating blow to the global economy,causing economic recession and prompting government departments and scholars to pay close attention to the risk management of banks.Various research results have shown that changes in bank risk exposure can affect the real economy and systemic financial risks through various channels.The emergence of digital finance has had a deep influence on the risks of traditional financial institutions,and this is one of the many factors that influence the risk-taking level of banks simultaneously.Its service advantages that span time and space have attracted widespread attention to the impact on local commercial banks that originally occupied geographical advantages.The enrichment of pertinent academic theories and the implementation of China’s financial sector are greatly enhanced by analyzing the transformation of digital finance and its effect on the risk-taking capacity of local commercial banks.In theory,this article examines the effect of digital finance on the risk-taking of local commercial banks and puts forward related research hypotheses.Constructing a benchmark regression model and utilizing sample data from commercial banks in both urban and rural areas from 2011 to 2018.An empirical examination of the effect of digital finance on the risk-taking of local commercial banks,both active and passive,has been conducted.This study delves into the varied effects of digital finance on the risk-taking capacity of local commercial banks,taking into account regional,bank type and scale heterogeneity.To bolster China’s regulatory authorities in executing dynamic and distinct prudential oversight of local commercial banks,and to enhance the examination of local banking regulations and stability-related matters.In conclusion,(1)The growth of digital finance has spurred both active and passive risk-taking of local commercial banks.The conclusions of this article remain robust,even after a series of robust tests.(2)For local commercial banks in different regions,the degree to which digital finance enhances the level of bank risk taking varies,which means there is regional heterogeneity.In the central and western regions,digital finance has a more profound effect on the active risk-taking of local commercial banks than in the eastern region.This indicates that the response of developed regions to the impact of digital finance is more robust and prudent,while banks in relatively backward regions affected by the impact of digital finance tend to take excessive risks;On the other hand,regarding passive risk taking:With the rapid development of digital finance,commercial banks in the western region have taken on more passive risks.Despite the digital transformation,the internal technology and management of banks have been significantly enhanced;however,it is still not enough to fully alleviate the passive risk load of commercial banks in the western region.(3)The level of bank risk taking is varied between urban and rural commercial banks due to the emergence of digital finance.The promotion of urban commercial banks has been greatly enhanced by digital finance,which has enabled them to take greater risks.Urban commercial banks,whose business has been severely hampered by digital finance’s swift growth,appear to be more eager to take risks on their own volition.Urban commercial banks have seen a notable rise in their passive risk-taking.Urban commercial banks’ more assertive business practices have caused a heightened risk buildup subsequent to the occurrence,and the degree of passivity has been augmented.(4)The development of digital finance has a tendency to heighten the active risk-taking of large-scale local commercial banks,in contrast to small and medium-sized ones.No considerable effect was seen on passive risk taking.In summary,the willingness of large urban commercial banks to take risks on their own initiative has become stronger,but the level of passive risk taking has not improved,but has shown an upward trend.This article proposes that the government should take heed of the alterations in the risks experienced by local commercial banks,based on the research findings.Encourage the building and advancement of regional digital financial systems,and urge local commercial banks to bolster the investigation and utilization of digital technology.To ensure the stability of the local banking sector and avert systemic financial hazards caused by outside disturbances,it is essential. |
