Effect of Big Data on Bank Lending:Evidence from Digital Social Credit Platform
The impact of digitalization on economic growth,with data as its core production factor,has become increas-ingly evident.In recent years,cities in China have progressively undertaken digital transformation,building upon the original social credit system.This transformation involves the establishment of database systems and service platforms,facilitating the sharing of administrative big data across government departments,and building a nationwide digital social credit system.As a country mainly financed by bank credit,China needs to focus on the quality of bank credit and the risk of default to prevent and resolve financial risks.This paper incorporates data elements into the analytical framework of information asymmetry between banks and firms and examines how improved data availability affects banks'lending behavior.This paper divides the information asymmetry into two levels.The first level is the asymmetry in the availability of the data themselves.This is reflected in the fact that the digital social credit system increases the availability of data to banks,helping them to identify credit de-fault risks and establish a trustworthy environment.The second level is the asymmetry at the level of the ability to ana-lyze the data.On the one hand,if the gap in data processing capabilities between banks is too large,banks with greater ca-pabilities will enjoy greater monopoly power,which may hinder competition in the credit market and worsen the welfare of all borrowers in the credit market.On the other hand,different allocation of data elements may affect the structure of the credit market with significant welfare effects.Using a total of 5,370,263 corporate loan tracking records as a sample and the establishment of a digital social credit platform as a quasi-natural experiment,this paper applies the difference-in-differences(DID)model to test the effect of improving bank data availability on banks'monitoring of credit default risk and the mechanisms behind it.This paper finds that:(1)The improvement of bank data availability leads to a significant decrease of 1.60%in the loan default rate,and the effect is more significant in borrowers with rich information footprints and banks with stronger data processing capabilities;(2)Mechanism test shows that the digitalized social credit platform significantly mitigates the adverse selec-tion and moral hazards between banks and borrowers,enhances the information screening capabilities of banks,and change the matching structure of banks and borrowers,thus effectively reducing the risk of credit default;(3)Further analysis shows that by integrating the information of the tax authorities through the digital social credit platform,banks carry out effective punishment for borrowers with overdue taxes,reduce the probability of granting credit loans to them,and increase the requirement of collaterals;(4)The impact of the digital social credit platform on the amount of loans and interest rates varies with the size of the borrowers and the data processing capacity of the lending bank.The smaller the size of the borrowers,the more difficult for them to benefit from the credit platform;and the greater the data processing capacity of banks,the higher the interest rate after the establishment of the digital credit platform.This paper has the following contributions.Firstly,it examines the impact of the digital social credit platform on bank credit behavior,providing empirical evidence supporting multi-departmental collaborative supervision.Secondly,in the era of big data,discussing data accessibility and data processing capabilities becomes equally important,as lacking ei-ther capability may lead to new social inequalities.Unlike previous research frameworks that do not directly distinguish whether information asymmetry stems from insufficient data accessibility or inadequate data processing capabilities,this paper categorizes information asymmetry between banks and enterprises into data accessibility and data processing capa-bilities,addressing the heterogeneous effects of improved bank data accessibility and differences in bank data processing capabilities on borrower welfare.Thirdly,it discusses for the first time the impact of digital social credit platform con-struction based on government big data on information asymmetry between banks and enterprises in credit activities.This enriches research on methods for reducing information asymmetry between banks and enterprises and holds practical sig-nificance for the high-quality development of both digital and real economies.
Digital EconomyData ElementsSocial Credit PlatformsBank Credit