<b>Analysis of Knowledge Management, Organizational Ambidexterity and Financial Innovation in Banking Sector</b>

Abstract

The banking industry is the backbone of an economy. The competition in the banking sector and the threat of a third financial crisis require banks to become more effective and efficient. It may be accomplished through financial innovation. The primary purpose of the research is to develop a framework for fostering financial innovation through evaluating the relationship among knowledge management (KM), organizational ambidexterity (OAMB), and level of financial innovation (LoFI) in the banking sector and to develop a framework. To achieve the research aim, a survey was carried out among the commercial banks of Pakistan. The findings of this research are based on 383 responses from Pakistan. The collected data was analyzed using structural equational modeling. Findings indicated that KM significantly influenced OAMB and LoFI, and OAMB significantly influenced LoFI. Moreover, organizational climate (OC) moderated the relationship between KM and OAMB, and environmental dynamism moderated the relationship between OAMB and LoFI. The researcher also analyzed the relationship between OAMB, KM, and LoFI and found that OAMB mediated the relationship between KM and LoFI. Based on the research findings, the researcher suggested that banks should enhance the level of KM and OAMB as these two things increase LoFI. Banks should also foster OC in a way that may enhance learning and sharing. Likewise, banks should also critically appraise the external environment to increase LoFI.