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Bank credit in the digital age: Expansion or excessive expansion?

Author

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  • Wu, Wenyang
  • Tang, Shenfeng

Abstract

This study demonstrates that digitalisation greatly facilitates the growth of credit, but does not result in rapid and unsustainable increase. The mechanism tests demonstrate that the influence of digitalisation on the growth of credit is accomplished by reducing the danger of bad debt after a loan and increasing the desire for risk before the loan. Upon further examination, it is evident that digitalisation has facilitated the growth of credit in the real economy while inhibiting the growth in the virtual economy. This study contributes to the existing literature on the nexus between digitalisation and loan allocation.

Suggested Citation

  • Wu, Wenyang & Tang, Shenfeng, 2024. "Bank credit in the digital age: Expansion or excessive expansion?," Finance Research Letters, Elsevier, vol. 70(C).
    • Handle: RePEc:eee:finlet:v:70:y:2024:i:c:s1544612324014235
    DOI: 10.1016/j.frl.2024.106394
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    More about this item

    Keywords

    Digitalisation; Credit expansion; Risk preference; Banks;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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