Digital transformation and bank risk-taking: management efficiency and credit structure perspectives

Purpose The present study examines the role of digital transformation in reducing bank risk-taking, focusing on Chinese commercial banks. It addresses the mediating role of management efficiency and credit structure and includes both a heterogeneity analysis and an assessment of marginal effects. Design/methodology/approach The text mining approach was used to construct a digital transformation index of 113 commercial banks, considering digital strategy as well as digital technology. This research aimed to explore the relationship between digital transformation and bank risk-taking employing panel fixed effects, mediating effects, and quantile regression models. Findings The analysis shows that management efficiency and credit structure are key mediating factors between digital transformation and bank risk-taking. Additionally, digital transformation is more effective in reducing the risk of urban commercial banks, state-owned banks, and listed banks. While the impact of digital transformation increases with the increase of the non-performing loan ratio. Research limitations/implications The region and industry considered in the study are limited to commercial banks in China, which may affect the generalizability of the research conclusions. Future research could consider different industries and regions to verify and enrich existing research results. Practical implications The findings underscore the necessity to combine digital transformation with effective organizational management and structural adjustments. Improving management efficiency and optimizing credit structure can enhance banks’ risk management capabilities. Originality/value This study deeply reveals how digital transformation can reduce the risk-taking of commercial banks through management efficiency and credit structure. It provides valuable insights for academic research and practical applications in the field of management. Highlights