Network structure of urban digital financial technology and its impact on the risk of commercial banks

Jiaqi Chang; Xuhan Xu; Jiaqi Chang; Xuhan Xu

doi:10.3934/era.2022240

Electronic Research Archive

2022, Volume 30, Issue 12: 4740-4762. doi: 10.3934/era.2022240

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Network structure of urban digital financial technology and its impact on the risk of commercial banks

Jiaqi Chang ¹,
Xuhan Xu ^{2
,
,}

1.
School of Business Administration, Guangdong University of Finance & Economics, Guangzhou, China
2.
School of Journalism and Communication, Hunan University, Changsha, China

Received: 08 September 2022 Revised: 21 October 2022 Accepted: 24 October 2022 Published: 23 December 2022

In the context of the development of digital finance, the complexity of the network formed by urban digital financial technology has been deepening. Based on Chinese city data from 2010 to 2019, this paper conducts a dynamic evaluation of urban digital financial technology through grey target theory and uses social network analysis methods to study the network structure characteristics of urban digital financial technology and its impact on commercial bank risks. The study found that the spatial network of urban digital financial technology shows a trend of complexity and closeness, developed cities occupy a central position in the network of digital financial technology linkages and are net spillovers of urban digital financial technology. Further research on the impact of urban digital financial network structure on commercial bank risk found that both the overall network structure of urban digital financial technology and individual network structure have a significant inhibiting effect on commercial bank risk. Therefore, this paper focuses on the balanced development of digital financial technology in cities, while seeking to further exert the demonstration role of developed cities and achieve the reduction of risk level of commercial banks through the increase of overall network density and the decrease of network efficiency and network hierarchy.
- digital financial technology,
- network structure,
- social network analysis,
- commercial bank risk
Citation: Jiaqi Chang, Xuhan Xu. Network structure of urban digital financial technology and its impact on the risk of commercial banks[J]. Electronic Research Archive, 2022, 30(12): 4740-4762. doi: 10.3934/era.2022240

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Abstract

In the context of the development of digital finance, the complexity of the network formed by urban digital financial technology has been deepening. Based on Chinese city data from 2010 to 2019, this paper conducts a dynamic evaluation of urban digital financial technology through grey target theory and uses social network analysis methods to study the network structure characteristics of urban digital financial technology and its impact on commercial bank risks. The study found that the spatial network of urban digital financial technology shows a trend of complexity and closeness, developed cities occupy a central position in the network of digital financial technology linkages and are net spillovers of urban digital financial technology. Further research on the impact of urban digital financial network structure on commercial bank risk found that both the overall network structure of urban digital financial technology and individual network structure have a significant inhibiting effect on commercial bank risk. Therefore, this paper focuses on the balanced development of digital financial technology in cities, while seeking to further exert the demonstration role of developed cities and achieve the reduction of risk level of commercial banks through the increase of overall network density and the decrease of network efficiency and network hierarchy.

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