|
|
|
| Can the Digital Transformation of Rural Credit Institutions Promote the Balancing of Dual Targets？ Analysis Based on the Perspective of Provincial Credit Cooperatives Union “Big Platform” Mode |
| WANG Xiuhua, PENG Derong, ZHAO Yaxiong
|
| College of Finance and Statistics, Hunan University |
|
|
|
Abstract Rural credit institutions often face conflicts between financial and social targets when providing inclusive financial services through traditional ways. Digital transformation offers new possibilities to alleviate this dual-target conflict. However, constrained by insufficient capital, talent, and technology, rural credit institutions find it difficult to achieve a digital breakthrough independently. Provincial credit cooperatives unions(PCCUs) have gradually become the key drivers of digital transformation for rural credit institutions. Data show that by the end of 2023, 26 provincial-level unions had explicitly stated their intention to leverage their scale advantages to build unified digital technology platforms to support the digital transformation of affiliated rural credit institutions. The fundamental aim of rural credit institutions in actively promoting digital transformation is to enhance operational capabilities and improve the quality and efficiency of services for agriculture, rural areas, and farmers (“Sannong”) through digital technologies. Therefore, whether the current digital transformation driven by PCU-based “big platform” is effective, whether it can genuinely enhance their capacity to serve "Sannong", and it can help rural credit institutions balancing financial and social targets are pressing practical questions that require answers.
From the perspective of balancing financial and social targets, this paper utilizes micro-level data of rural credit institutions from 2011 to 2022 to examine the effectiveness of digital transformation under the PCCU “big platform” mode. The study finds that, first, the digital transformation under the PCCU “big platform” mode not only enables rural credit institutions to balance financial and social targets but also facilitates mutual reinforcement between the two objectives. Second, the mechanism through which this mode promotes such dual-target balancing lies in its ability to enhance the operational efficiency and agricultural support efficiency of rural credit institutions, reduce operational and management costs, and strengthen risk control capabilities. Third, although the digital transformation under the “big platform” mode can raise the interest spread on the loan side and thereby expand profit margins, it does not have a significant effect on the deposit-side interest spread, which poses a challenge to the realization of dual-target balancing for rural credit institutions. Fourth, the digital transformation driven by the PCCU “big platform” mode is more effective for small-scale institutions, those located in regions with higher levels of digital financial development, and those in eastern China.
The contributions of this paper are as follows: First, while existing studies mainly focus on the digital transformation of large or listed banks, this paper turns its attention to the digital transformation modes and outcomes of relatively weaker rural credit institutions, thereby enriching the literature on the digital transformation of commercial banks. Second, although a few studies pay attention to the digital transformation of rural financial institutions, they tend to focus on individual institutions, overlooking the coordinating and supporting role of PCCUs in the transformation process. This paper focuses on the PCCU digital “big platform” and investigates the financial and social effects of PCCU-driven digital transformation of rural credit institutions, which helps broaden existing research. Third, differing from the existing literature that often treats financial and social targets in isolation, this paper employs a system of simultaneous equations to evaluate the effects of digital transformation from the perspective of balancing both targets and considers their mutual influences, thereby enhancing the robustness of the analytical conclusions.
The policy implications of this paper are as follows: First, it is essential to fully leverage the coordinating function of PCCUs to advance the digital transformation of rural credit institutions. In promoting reforms to the PCCU system, efforts should be made to strengthen its service and coordination capacity and harness its advantages in resource allocation, technological integration, and platform development through scale and intensification. At the same time, the orderly promotion of the establishment of provincial-level joint-stock rural commercial banks or provincial rural commercial banks should be pursued to further enhance their capabilities in digital system development and technological integration. Second, differentiated digital development paths should be explored to improve the profitability of rural credit institutions. While promoting unified digital transformation under PCCU coordination, over-reliance on PCCU digital platforms should be avoided. For rural credit institutions with a specific scale and capability, independent efforts to develop and apply digital technologies through multiple ways should be encouraged to achieve differentiated digital development. Third, a favorable external environment for the digital transformation of rural credit institutions should be cultivated. When formulating digital development policies, regulatory authorities should adopt targeted measures, increase investment in digital infrastructure in regions with low levels of digital development and weak financial foundations, enhance the provision of necessary financial, human, and technical support, and promote balanced digital development across regions.
|
|
Received: 08 October 2024
Published: 02 May 2025
|
|
|
|
|
| Cite this article: |
|
WANG Xiuhua,PENG Derong,ZHAO Yaxiong. Can the Digital Transformation of Rural Credit Institutions Promote the Balancing of Dual Targets？ Analysis Based on the Perspective of Provincial Credit Cooperatives Union “Big Platform” Mode[J]. Journal of Financial Research,
2025, 538(4): 75-94.
|
|
|
|
| URL: |
| http://www.jryj.org.cn/EN/ OR http://www.jryj.org.cn/EN/Y2025/V538/I4/75 |
|
|
|
