The impact of digital transformation of commercial banks on household income: Evidence from China

Abstract

Scholars have focused on the digital transformation of commercial banks, yet there remains a lack of systematic and integrative research at the micro-level of household finance. This article uses data from the China Household Finance Survey (CHFS) and the Digital Transformation Index of Chinese Commercial Banks from Peking University. It employs empirical methods such as mechanism analysis and heterogeneity analysis to explore the impact of the digital transformation of commercial banks on household income. The findings indicate that the digital transformation of commercial banks significantly enhances household income. Second, increasing credit availability, fostering the development of digital inclusive finance, enhancing entrepreneurial possibilities, and increasing the purchase of wealth management products are key pathways through which digital transformation affects household income. Third, heterogeneity analysis reveals that the positive effects of digital transformation on household income are more pronounced in the central and western regions, areas with lower financial industry competition, regions with underdeveloped inclusive finance, rural areas, and among low-income families. This study highlights the significant role that the digital transformation of commercial banks plays in enhancing the welfare of the resident sector.