Bank stability and robot adoption

Abstract

ABSTRACT This paper argues that improving bank stability as measured by bank z-scores leads to greater adoption of automation technology. Empirical investigation finds that improving bank stability leads to greater adoption of robots across countries and over time. Instrumental Variable estimation corroborates the finding. Greater bank z-scores implies higher ability of a bank to absorb return variability without going insolvent, implying greater availability of credit for investment. Thereby, providing more finance to firms to invest in automation technology.