Industrial robots are rapidly becoming a central component of production worldwide. This study examines whether and how a firm’s robot adoption impacts decisions of external stakeholders from the perspective of bank loan pricing.
Empirically, the authors test the relation between robot adoption and bank loan pricing based on a sample of 104,342 newly-granted loans for 2,381 Chinese borrowers during 2007–2014.
The results show that firms adopting robots benefit from lower loan pricing. Further mechanism analyses indicate that robot adoption enhances firm performance and mitigates information asymmetry between banks and borrowers, thereby reducing loan costs. The negative association between robot adoption and loan pricing is more pronounced among non-listed firms, non-state-owned firms, firms with fewer collateralizable assets, firms facing intense product market competition, and those located in regions with high labor costs. Additional tests confirm the positive effect of robot adoption on non-price contract terms, as evidenced by larger loan volumes and reduced requirements for guarantees or mortgages.
This study contributes to the literature on bank lending and robot adoption by highlighting the credit risk–reducing effect of automation technologies, especially within China’s bank-oriented financial system.
