Does the Matthew Effect Exist in the Digital Transformation of Banks:Empirical Interpretation Based on Banking Functions
With the rapid development of fintech,it is important to systematically clarify the impact of the digitization-enabled functional transformation of commercial banks and its heterogeneity for the scientific understanding and promotion of digital transformation of different types of banks.From the functional perspectives of bank liquidity creation and risk-taking,this paper empirically analyzes the impact of digital transformation on the functions of commercial banks and its possible"Matthew effect".It further examines the relationship between external digitalization and internal digitalization.All analyses are based on the Digital Transformation Index of Banks in China,constructed based on massive microdata collected through manual collation and text mining.The results show that the digital transformation of commercial banks can promote bank liquidity creation and restrain bank risk-taking.Second,the mechanism analysis shows that digital transformation affects bank liquidity creation and risk-taking mainly by enhancing profit efficiency and reducing banks'operating costs.Third,the enabling effect of digital transformation on bank liquidity creation and risk-taking has a"Matthew effect"in which the stronger banks become stronger and the weaker banks become weaker.The enabling effect of digital transformation on the two core functions of banks,liquidity creation and risk-taking,is more pronounced among large banks,which further exacerbates the polarization between large banks and small and medium-sized banks.From a molecular perspective,the impacts of digital strategy,digital organization,digital products,and digital technology on banks'liquidity creation have a significant Matthew effect in banks of different sizes.In terms of bank risk-taking,the digital organization has a significant"Matthew effect".Fourth,external digitalization has a certain"technology spillover effect"on the internal digitalization of banks.External digitalization can enhance the enabling effect of bank digital transformation on liquidity creation,which shows that the"technology spillover effect"is stronger than the"external competition effect"of external fintech development.However,as far as risk-taking is concerned,the technological spillovers from external digitization are offset by the market crowding-out effect,which is not significant for bank risk-taking.The possible marginal contributions of this paper are as follows:It fully discusses the heterogeneous differences in the functions of banks enabled by digital transformation,verifies the Matthew effect of bank digital transformation,and enriches existing literature on bank digital transformation.Regarding the measurement of digital transformation,this paper selects a richer array of secondary indicators to assess each sub-dimension comprehensively,and pays more attention to the foundational role of digital technology in the transformation in terms of weight.Additionally,this paper incorporates the influence of both external and internal digitalization on banking functions into a unified research framework to discuss the"technology spillover effect"of external digitalization on the internal digitalization of banks.This paper further deepens the understanding of the economic effects of the digital transformation of banks of different sizes and provides policy insights and decision-making references for the scientific promotion of the digital transformation of commercial banks.First,the core functions of liquidity creation and risk-taking of banks should be better played through the digital transformation of commercial banks.Second,it is necessary to fully understand the structural differences in the digital transformation of banks of different sizes,give full play to the demonstration effect and spillover effect of large banks,and strengthen support for small and medium-sized banks.Third,it is necessary to understand the dialectical relationship between the development of external fintech and banks'digital transformation,and further strengthen banks'collaboration with technology companies and Internet platform companies.
digital transformationcommercial bankbank liquidity creationbank risk-takingMatthew effect
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