Digital Transformation of Commercial Banks and Corporate ESG Performance: Evidence from China

Abstract

Based on a sample of Chinese A-share listed companies covering the period 2013–2023, this study investigates the effect of commercial banks’ digital transformation on corporate ESG performance. The empirical results indicate that the higher the degree of commercial banks’ digital transformation, the better the corporate ESG performance. Analysis of underlying mechanisms indicates that this effect operates primarily through two channels: the mitigation of corporate financing constraints and the reinforcement of external governance. Further cross-sectional analysis shows that this positive relationship is particularly pronounced among non-state-owned enterprises, heavily polluting firms, and those characterized by higher levels of digital transformation. This study extends the literature on the determinants of corporate ESG performance and offers incremental evidence on the microeconomic effects of commercial banks’ digital transformation.