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Does Electronization Affect the Risk-Taking of Rural Commercial Banks?

【Authors】
ZHANG Zhengping & LIU Yunhua
【WorkUnit】
Beijing Technology and Business University, 100048.
【Abstract】

China's banking industry is rapidly striding into the new era of informatization and digitalization, but the rural commercial banks (RCBs) are still in the early stage of digitalization, as mainly reflected in electronization. It is worth noting that electronization has given the RCBs a completely new look, but the number of risk events of RCBs does not seem to drop. As existing studies show little concern about the relationship between the electronization of RCBs and their risk-taking, this paper adopts the M construction theory to study the RCBs' electronization from two dimensions: electronization of infrastructure and the channel. Based on the unbalanced panel data of 165 RCBs from 2014 to 2018, this paper conducts an empirical study upon the impact of RCBs' electronization on their risk-taking. The paper finds that RCBs' rising electronization will reduce their risk-taking. Specifically, the RCBs' higher operating efficiency enabled by the growing infrastructure electronization will lower their risk-taking, and the RCBs' growing non-interest income from the greater channel electronization will raise their risk-taking. These conclusions are significant for RCBs to further enhance electronization, accelerate digital transformation and strengthen risk management.

 

JEL:G21, G32

【KeyWords】
Rural Commercial Banks, Electronization, Risk-Taking, M Construction Theory