Public data openness and bank liquidity creation: Evidence from Chinese regional banks

We examine the impact of data as a production factor on bank liquidity creation, using the staggered launch of municipal public data open platforms in China as a quasi-natural experiment. Public data openness significantly enhances bank liquidity creation. This effect is concentrated in on-balance-sheet activities (the expansion of long-term lending and demand deposit transformation), while off-balance-sheet activities remain unaffected. Consistent with public data functioning as high-quality hard information that mitigates information asymmetry, the implied increase in liquidity creation co-occurs with lower insolvency risk and credit risk. Public data openness provides a compensatory effect during the COVID-19 pandemic and exhibits a synergistic effect for banks with superior data-processing capabilities.