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| The Impact of Digital Credit Development on Regional Financial Risks: Based on the Perspective of the Non-Financial Corporate Sector |
| SONG Lu, LI Jialin, FANG Yi
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| School of Smart Governance/School of Applied Economics/ National Academy of Development and Strategy, Renmin University of China |
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Abstract The Fourth Plenary Session of the 20th Central Committee of the Communist Party of China has recommended that during the 15th Five-Year Plan period, we should draw on a full range of resources and means to address risks and develop the system for preventing and defusing risks, so as to ensure stable operations in the financial sector. In this context, preventing and mitigating financial risks has become a critical task to ensure economic stability. As both a major source and the ultimate bearer of regional financial risks, the real economy plays a central role in the formation and transmission of the risks. Among the three sectors of the real economy, the non-financial enterprise sector holds the highest macro leverage ratio, and is the primary source of overall financial risk. Its assets (and liabilities) largely correspond to the liabilities (and assets) of the financial sector. When non-financial enterprises face insolvency risk, they may be unable to repay loans, thereby triggering credit risks for financial institutions. In recent years, the widespread adoption of digital technology has driven profound transformations in financial service models. Among these, digital credit, characterized by its immediacy, automation, and remote accessibility, has emerged as an essential tool for financing the real economy. Systematically examining the impact of digital credit development on regional financial risk is thus of substantial theoretical and policy significance for promoting financial support to the real economy and preventing systemic risks.
This study utilizes micro-level data from 5,679 listed non-financial enterprises to construct macro balance sheets and contingent equity balance sheets for 31 provincial-level administrative regions in China. Based on four dimensions:operational risk, liquidity risk, insolvency risk, and market risk, we develop a regional financial risk index using data primarily sourced from the CSMAR database. Unlike existing studies that mainly rely on financial system indicators, this research adopts a microeconomic enterprise perspective to reveal the endogenous mechanisms underlying the generation of regional financial risk, thereby enhancing the effectiveness and forward-looking nature of risk measurement. We then apply a two-way fixed effects spatial Durbin model to empirically examine the direct and spatial spillover effects of digital credit development on regional financial risk during 2011~2022, followed by a mechanism analysis to explore the underlying transmission pathways.
The results reveal three key findings. First, the constructed regional financial risk index effectively captures the impact of macroeconomic shocks on the real economy and financial system. Major events such as the 2015 stock market turbulence and the 2020 COVID-19 outbreak are clearly reflected as significant fluctuations in the index. Second, digital credit development significantly alleviates regional financial risks, not only within local regions but also on neighboring regions through spatial spillover effect, with the mitigating impact accumulating over time. At the risk-dimension level, digital credit primarily operates by easing firms’ operational and liquidity risks. Spatial heterogeneity analysis further indicates the existence of spillover barriers among urban clusters. Third, mechanism analysis shows that digital credit reduces regional financial risk by lowering information asymmetry and enhancing financial competition within regions. Additionally, by strengthening interregional capital flows and trade linkages, digital credit amplifies the spatial spillover of risk mitigation effects.
On the basis of the above results and from a policy perspective, the study suggests: (1) accelerating the construction of infrastructure for digital finance through government investment, fiscal subsidies, and tax incentives to expand coverage and improve service efficiency of digital credit; and (2) promoting the development of digital credit comprehensively, removing administrative barriers, enhancing interregional capital flow and trade linkages, and improving information and capital flow channels to foster deeper integration between the digital and real economies. This would enable digital credit to serve as a sustainable driving force for mitigating regional financial risk.
The contributions of this research are threefold. First, it innovatively constructs a regional financial risk index from the micro perspective of non-financial enterprises, offering a new approach for measuring financial risks, providing a scientific basis for promoting financial support to the real economy and mitigating financial risks. Second, by employing spatial econometric methods, the study systematically examines the cross-regional transmission of the effects of digital credit development on financial risk, advancing research on financial risk spillovers. Third, it reveals both the direct and indirect mechanisms through which digital credit influences financial risk, offering new insights into the formation and transmission of financial risks in the digital era. Future research may further extend this work by incorporating larger and more diverse enterprise samples with longer time spans to test the robustness of the conclusions; obtaining richer regional digital credit data to explore different digital credit models and their risk mitigation effects; and examining the interactions between digital credit and emerging financial forms such as green finance and inclusive finance to build a more comprehensive framework for digital finance and regional risk management.
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Received: 15 April 2025
Published: 01 April 2026
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