Shadow Banking Activities of Non-Financial Enterprises and Corporate Risk-Taking in China: Evidence from the Perspective of Information Disclosure

Abstract

Based on the theoretical modelling of shadow banking's impact mechanism on corporate risk-taking behaviour, this study empirically investigates the relationship between shadow banking activities and corporate risk-taking using data from non-financial A-share listed companies during 2007-2022. The findings reveal that corporate engagement in shadow banking activities significantly increases their risk-taking levels, with this positive correlation being more pronounced in non-state-owned enterprises and regions with lower digital financial inclusion development. Furthermore, information disclosure quality effectively weakens the positive correlation between shadow banking and corporate risk-taking, indicating that companies with higher quality information disclosure significantly reduce their risk-taking levels associated with shadow banking activities. This study provides policy implications for government and regulatory authorities on mitigating excessive corporate participation in shadow banking activities.