How Trade Policy Uncertainty Influences the Digital Transformation of Commercial Banks? Evidence from China

Amid intensifying global trade protectionism and rapid digital transformation, trade policy uncertainty (TPU) has become an important external factor shaping banks’ strategic behavior. Yet bank-level evidence on whether TPU accelerates or inhibits banks’ digital transformation remains limited. Using an unbalanced panel of Chinese commercial banks from 2010 to 2018, this study links macro-level trade policy shocks to banks’ digitalization decisions. The results show that higher TPU significantly promotes banks’ digital transformation across strategic, business, and managerial dimensions. Mechanism analysis indicates that market competition, innovation capability, and operational efficiency strengthen this relationship, whereas higher risk-taking weakens it by inducing strategic contraction under uncertainty. Heterogeneity tests show that the promoting effect is significant across bank types, with larger estimates for large state-owned and nationwide joint-stock banks, and varies regionally, being significant in the eastern, western, northeastern, and national groups but not in the central region. Overall, the study provides bank-level evidence that TPU can promote rather than impede digital transformation, offering insights into how financial intermediaries adjust strategic decisions under macroeconomic uncertainty.