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Exacerbation or suppression? Digital transformation and shadow banking activities of non-financial firms

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  • Zhao, Xiaoqing
  • Yao, Chen

Abstract

Using an unbalanced panel dataset from Chinese non-financial firms spanning 2008–2021, this research explores the relationship between digital transformation and shadow banking. Contrary to expectations, the evidence indicates that digital transformation accelerates shadow banking rather than suppressing it. A result resilient to potential endogeneity, proxy variables, and outlier exclusion. Furthermore, shadow banking exacerbates operational risk, a pattern particularly prominent among firms with underdeveloped digital capabilities, intimating that digital maturity may alleviate the detrimental impacts. This study elucidates the economic repercussions of shadow banking in the digital transformation epoch, yielding valuable insights.

Suggested Citation

  • Zhao, Xiaoqing & Yao, Chen, 2024. "Exacerbation or suppression? Digital transformation and shadow banking activities of non-financial firms," Finance Research Letters, Elsevier, vol. 61(C).
    • Handle: RePEc:eee:finlet:v:61:y:2024:i:c:s1544612323013193
    DOI: 10.1016/j.frl.2023.104947
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    Cited by:

    1. Dong, Yan & Dong, Mengyao & Tan, Suhang & Ge, Ran, 2024. "Shadow banking, financial regulation, and bank risk in China," Finance Research Letters, Elsevier, vol. 63(C).

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