Climate beliefs, attitudes, and bank risk management

This study investigates the relationship between press freedom and bank default risk across countries, with particular attention to the role of institutional quality, financial development, and information transmission mechanisms. Using an unbalanced panel of 128 countries over the period 2000–2022, the paper applies dynamic panel data techniques to examine how press freedom affects banking stability, measured by the banking Z-score. To account for cross-country heterogeneity, countries are grouped by income level, geographic region, and resource dependence. In addition, a panel Blinder–Oaxaca decomposition is employed to identify the factors driving differences in average bank default risk across country groups, while a Threshold ARCH (TARCH) model is used to assess asymmetric responses of bank risk to positive and negative news. The results show that press freedom alone is not a consistent predictor of bank default risk across countries. Instead, its impact depends on the broader informational and institutional environment. In countries with higher education levels and greater internet penetration, increased press freedom is associated with higher bank default risk, indicating that more informed and digitally connected populations may react more strongly to financial news, amplifying herding behavior and bank fragility. Evidence from the TARCH model further suggests that bank default risk responds asymmetrically to news shocks, with negative news exerting a stronger effect than positive news. Overall, the findings underscore the importance of institutional context when evaluating the role of press freedom in financial stability.

When governments raise tariffs or impose sudden export restrictions, the immediate concern typically centres on trade competitiveness; however, the deeper consequence may lie elsewhere, in the stability of domestic banks. Trade regulation in India has historically operated through the Customs Act, 1962 and executive control over foreign commerce, shaped by commitments under the World Trade Organization and broader principles of international economic law. Banking stability, in contrast, is governed by the Reserve Bank of India Act, 1934, the Banking Regulation Act, 1949, and the Insolvency and Bankruptcy Code, 2016; frameworks designed to safeguard credit discipline, ensure capital adequacy, and preserve systemic resilience. These domains have evolved in parallel, institutionally and conceptually distinct, and are rarely examined as structurally interconnected within legal scholarship or regulatory design. Yet contemporary tariff escalations, retaliatory trade measures, export bans, carbon-border adjustments, and supply-chain realignments demonstrate that external trade shocks can significantly compress corporate revenues, disrupt export-dependent industries, intensify leverage stress, inflate non-performing assets, and accelerate insolvency proceedings. What begins as an instrument of economic diplomacy may therefore transmit volatility into bank balance sheets, credit markets, and broader financial stability indicators, affecting lending behaviour, capital provisioning, and risk-weight assessments. Despite this cascading effect, India’s macroprudential regulatory architecture does not explicitly categorise trade-policy volatility or geopolitical economic conflict as a systemic banking risk, nor does it formally integrate such disruptions into supervisory stress-testing frameworks or prudential oversight mechanisms. By tracing the doctrinal separation between trade governance and financial regulation, and analysing how tariff-induced corporate distress interacts with prudential norms, insolvency processes, and supervisory discretion, this article reconceptualizes trade policy as an internal generator of financial risk rather than merely an external economic tool. It argues for a more integrated regulatory approach in which financial supervisors anticipate and incorporate trade-policy shocks into systemic risk assessment, thereby rethinking the boundaries between international economic law and domestic banking stability in India. Keywords: Banking Regulation, Financial Stability, Macroprudential, Systemic Risk, Tariffs, Trade Policy.

The marginal effects of government ownership on individual bank risk and systemic risk: Evidence from China

This study aims to analyze the impact of environmental, social, and governance (ESG) disclosure quality on banking risk. Data were collected from the 100 largest commercial banks in the Middle East and Africa over ten years and examined using econometric analysis to measure the influence of ESG disclosure quality on banking risks. The findings indicate that both social and environmental disclosures have high predictability, while governance disclosure shows lower predictability. A significant negative relationship exists between the ESG disclosure quality and risk. Governance disclosure, Tier 1 capital, has a strong influence, and capital adequacy has the least. Managerial and practical implications are based on bank compliance, coverage, and debt. Unlike previous studies, this study moves from ESG performance to its disclosure quality and combines the random forest method (machine learning) with dynamic panel analysis (econometrics), bringing innovation and contribution to knowledge (the stakeholder theory) and practice.

The Dividend Policy and Managerial Risk in Banks : Focusing on the Moderating Role of Capital Adequacy in Korea

After more than two decades of rapid growth, China's real estate market has gradually contracted in recent years amid economic weakness, with property prices beginning to fall sharply. Since new home sales in China primarily operate under a pre-sale system, where developers secure government land through auctions, mortgage that land to banks for development funding, and rely on bank capital alongside buyers' down payments and mortgages, the price decline not only adversely impacts banks' real estate loan risks but also leads to buyers defaulting due to insufficient collateral value, thereby amplifying systemic financial risks. Against this backdrop, our study examines the mediating role of educational attainment, measuring whether regional housing price fluctuations influence the non-performing loan ratio of commercial banks' real estate loans through educational levels. Using a bank-level panel matched to provincial socio-economic indicators, we estimate fixed effects models and implement a three-step mediation design with bootstrap inference. The evidence reveals a clear mechanism: changes in housing prices are associated with higher regional educational attainment; in turn, education is linked to greater credit expansion and higher non-performing loan ratios. Once this channel is taken into account, the direct link between housing prices and bank risk markedly attenuates, with the bulk of the overall effect operating indirectly through education. These patterns are economically meaningful, robust to alternative education proxies, and extensive resampling. The findings highlight a macroprudential paradox: while better-educated borrowers are typically safer at the micro level, improvements in human capital can, at scale, amplify risk-taking and balance-sheet exposure. Supervisors should therefore monitor human capital trends alongside collateral dynamics and incorporate them into early warning systems and the calibration of borrower and capital-based tools, so that bank risk assessments remain informative even in a housing market downturn.

This article provides a comprehensive assessment of banking risks in the Republic of Kazakhstan amid macroeconomic volatility, external shocks, and structural transformations in the financial system. The country’s banking sector, characterized by a high concentration of assets and dependence on external capital markets, demonstrates significant vulnerability to currency, credit, and liquidity risks. The purpose of the study is to identify the key sources of vulnerability in Kazakhstani banks, determine the macroeconomic factors affecting the dynamics of risks, and develop recommendations for improving the risk-management framework. The methodological approach integrates a multimethod analytical toolkit, including the Value-at-Risk model for market risk assessment, macro - and microprudential stress testing, the CAMELS framework for evaluating bank soundness, and a fixed-effects panel regression to identify the determinants of credit risk. The empirical base is constructed using data from the ARDFM, the National Bank of Kazakhstan, the International Monetary Fund, and banks’ financial statements for the period 2014–2024. The findings indicate that currency risk remains a system-forming component of the risk profile of Kazakhstani banks, reflecting the high dollarization of assets and liabilities. Stress-testing results show that under combined macroeconomic shocks, banks face a notable decline in capital adequacy, an increase in non-performing loans, and liquidity shortages - all of which may pose risks to financial stability. The CAMELS analysis reveals structural imbalances: relatively strong capital and liquidity indicators contrast with weaker asset quality and heightened sensitivity to market risks. The econometric model confirms that depreciation, inflation, and monetary tightening significantly increase NPL levels, whereas economic growth contributes to their reduction. Based on the results, the study substantiates the need to strengthen macroprudential regulation, expand currency risk-hedging instruments, improve corporate governance, and enhance stress-testing methodologies. The research develops scientifically grounded recommendations aimed at increasing the resilience of Kazakhstan’s banking sector.

Abstract While Internet banking (IB) adoption after COVID-19 has become widespread in Egypt, understanding the factors that drive customers to continue using these services remains a critical and underexplored area. This surge in IB utilization poses a high risk for banks in future if it is not accompanied by a high adaptability of the Egyptians to this transformation. Previous studies demonstrate the Egyptian cultural preference for traditional banking relationships and personal interactions. Trust issues, perceived risks around privacy and security, and a conservative attitude towards digital finance might strongly influence IB continuous adoption behaviours (Fawzy and Esawai in J Bus Retail Manag Res 12, 2017). Thus, this study seeks to deepen the understanding of the factors influencing the continuous use of Internet banking in Egypt. This paper focuses on the significant direct and indirect drivers for continuous IB service usage during and after COVID-19 in Egypt. A conceptual model grounded in the extended technology acceptance model (TAM2) is developed and studied using the survey-based structural equation model. Data were collected using an online questionnaire from 300 Egyptian bank customers who adopt financial transactional Internet banking. Structural equation modelling (SEM) is utilized for data analysis. The study findings reveal that perceived risk of COVID-19 (PRC), perceived usefulness (PU), subjective norms (SNs), and expectation confirmation (CONF) are significant direct and indirect drivers for explaining customers’ IB continuous intentions during and after COVID-19. Accordingly, this research contributes to the existing literature by highlighting the significant determinants of IB post-adoption behaviour. In addition, the paper provides useful practical implications for bank managers, website developers, and policymakers on how to develop effective strategies to enhance the usefulness of IB and boost the IB users’ expectation confirmation that would strengthen their attitudes and their continuous intentions ensuring banks’ IB revenue stream continuity.

ABSTRACT This paper examines how real estate market cycles shape credit risk in Chinese commercial banks, with an emphasis on residential mortgage lending. Using an unbalanced panel of 145 banks over 2013–2024, we apply stochastic frontier analysis to decompose the non-performing loan (NPL) ratio into an inherent risk component related to loan scale and portfolio composition and an inefficiency component that captures excess non-performance attributable to weaknesses in monitoring and risk recognition. We find that during the housing upswing, higher residential mortgage exposure is associated with lower measured lending inefficiency, consistent with collateral appreciation and delayed recognition suppressing observed non-performance. After 2021, when house prices softened, mortgage growth slowed, and regulatory tightening intensified, this negative association attenuates markedly. The state-dependent pattern is concentrated among state-owned and joint-stock banks with higher real estate exposure, whereas urban and rural commercial banks exhibit comparatively stable inefficiency dynamics. Robustness checks using alternative credit-risk proxies yield consistent conclusions.

The rapid advancement of financial technology (fintech) has significantly disrupted the traditional banking sector by introducing innovative services and business models that enhance efficiency, reduce costs, and promote financial inclusion. However, these benefits also bring emerging operational risks, such as cybersecurity threats, data privacy concerns, and regulatory compliance challenges. This systematic literature review synthesizes findings from 13 peer-reviewed journal articles published in the last five years, selected through a rigorous PRISMA-based methodology. The analysis identifies key themes, including the transformative role of technologies like artificial intelligence, blockchain, and big data analytics; the reconfiguration of risk management frameworks; and the evolving relationship between digital innovation and operational resilience. The results indicate that while fintech adoption offers substantial opportunities for competitiveness and customer engagement, it also necessitates proactive governance, robust cybersecurity measures, and continuous workforce upskilling. The discussion emphasizes the need for collaborative efforts among regulators, financial institutions, and technology providers to develop adaptive strategies that can mitigate risks in an evolving digital landscape. By addressing both the opportunities and vulnerabilities presented by fintech disruption, this review enhances our understanding of its implications for operational risk in banking and provides directions for future research.

Abstract Background Against the backdrop of macroeconomic fluctuations and increasing uncertainty in financial markets, frequent financial crisis events have caused anxiety, panic, and shaken trust among bank customers. Existing research has mostly focused on macro financial stability or bank risk management, with insufficient attention paid to individual customer psychological reactions and their coping mechanisms. This article takes bank customers as the research object, systematically analyzes the formation mechanism and evolution characteristics of anxiety psychology in financial crisis situations, and explores the intervention effects of different coping strategies, in order to provide operational reference and theoretical support for bank crisis communication and customer psychological intervention. Methods The research adopts a combination of questionnaire survey and experimental scenario simulation. Firstly, a typical financial crisis scenario is constructed to simulate bank liquidity tightness or market volatility through text and data description, in order to induce participants' risk perception. Secondly, standardized anxiety scales and customer trust perception scales were used to measure the psychological states of participants before and after the crisis. Subsequently, different intervention strategies were introduced, divided into an information transparency group, an emotional comfort group, and a rational decision guidance group, with each group receiving corresponding interventions at the same time. Finally, statistical analysis was conducted on the data before and after intervention to compare the characteristics of changes in customer anxiety levels under different strategies. Descriptive statistics, paired sample t-test, and analysis of variance were used for data analysis, with a significance level set at p<.05. Results The results showed that financial crisis situations significantly increased customer anxiety levels, with an average anxiety score rising from 32.48 ± 4.21 to 41.76 ± 4.03. Different coping strategies can alleviate anxiety to a certain extent, with the information transparency group experiencing a decrease in anxiety to 34.12 ± 3.86, the emotional comfort group at 36.27 ± 3.94, and the rational decision guidance group at 33.85 ± 3.72. The results of the analysis of variance showed significant differences in the intervention effects among the groups (p<.05), indicating that the type of coping strategy has an important impact on anxiety relief. Discussion This study systematically investigated the anxiety psychology and coping strategies of bank customers in financial crisis situations from a micro psychological perspective. The research results show that financial crises significantly exacerbate the anxiety of bank customers, and systematic coping strategies can effectively alleviate negative emotions. Among them, information transparency and rational decision-making guidance have the most significant effect in reducing anxiety and stabilizing trust. The study supplements micro evidence of financial crisis management from the perspective of customer psychology, which has practical significance for banks to improve crisis communication mechanisms and enhance customer relationship management. Future research can combine longitudinal tracking design to further investigate the moderating effect of different customer characteristics on the effectiveness of psychological intervention, and introduce physiological or behavioral indicators to enhance the explanatory power and application value of research conclusions.

This study examines the impact of corporate governance on sustainability-related risk in Indian banks across crisis and post-crisis periods. Using data from 37 public and private banks between 2006 and 2018, it analyzes how board characteristics influence liquidity and solvency risk. Panel regressions and a decision tree-based machine learning approach reveal consistent results: director busyness is associated with higher liquidity risk, while higher director and auditor fees are linked to improved liquidity management. Smaller, more independent boards and higher director fees are associated with lower solvency risk. The findings contribute emerging-market evidence on the governance–risk nexus and offer policy implications for bank governance and financial stability.

Purpose – This study investigates how credit risk, profit-and-loss sharing (PLS) financing, and regional economic growth shape the profitability of Islamic rural banks in Indonesia and whether PLS portfolios and local conditions buffer the adverse effect of non-performing financing (NPF) on profitability through a moderating effect.Methodology – The analysis uses a balanced panel of 135 Islamic Rural Banks (IRBs) for 2019–2024, combining bank-level data with Gross Regional Domestic Product (GRDP) per capita growth. Fixed-effects panel regressions with two- and three-way interactions between NPF, PLS measures (total PLS, mudharabah, musharakah), and regional growth were estimated, controlling for size, capital adequacy, efficiency, funding structure, and time effects.Findings – The results demonstrate a robust negative association between non-performing financing (NPF) and return on assets (ROA). Mudharabah-based profit-and-loss sharing (PLS), rather than aggregate PLS or Musharakah alone, attenuates the impact of NPF. Similarly, higher regional growth weakens the marginal effect of credit risk. A negative and significant triple interaction indicates that Mudharabah intensity and favorable regional growth act as substitutes rather than complements, with the strongest mitigation of the NPF effect observed at low to moderate levels of both variables.Implications – The evidence suggests that IRB managers and regulators should calibrate PLS portfolios for regional macroeconomic conditions. Understanding local growth environments can guide the PLS configurations that are most appropriate for promotion within supervisory areas.Originality – This study is among the first to jointly examine the roles of PLS contract composition and regional economic growth in the credit-risk–profitability nexus of IRBs, showing how risk-sharing finance and local business cycles interact in shaping Islamic bank performance.

ABSTRACT Prior studies examining the effects of debt restructuring on bank risk typically rely on conventional indicators such as non-performing assets (NPAs) or Z-scores. However, these backward-looking measures may fail to capture signals of credit deterioration, particularly in environments characterized by regulatory forbearance. In contrast, loan loss provisions (LLPs) incorporate both incurred and expected credit losses and reflect managerial discretion, thereby offering a more forward-looking and nuanced assessment of loan portfolio quality. To address these limitations, we develop a novel LLP-based specification to evaluate how debt restructuring affects bank risk, conditional on regulatory regimes and ownership characteristics. Using panel data on Indian banks from 2005 to 2024, our empirical strategy exploits exogenous shifts in the regulatory frameworks to identify differential impacts across regimes and bank types. Our findings indicate that while debt restructuring may temporarily suppress reported NPAs, its long-term effectiveness depends on the underlying motives and governance structures. In particular, state-owned banks exhibit greater risk-taking behavior relative to private banks, especially under forbearance regimes, highlighting the role of ownership and regulatory discipline in shaping risk outcomes.

This study examines the impact of the COSO Internal Control Framework on mitigating cybersecurity risks in banks operating in the Republic of Yemen. The study adopts a descriptive–analytical approach due to its suitability for the research objectives. Primary data were collected through a questionnaire administered to financial managers, internal audit managers, and employees working in financial management, internal auditing, and information technology departments. A total of 154 valid responses were analysed. The findings reveal a statistically significant impact of implementing the COSO framework on reducing cybersecurity risks in Yemeni banks. Specifically, a strong control environment, effective risk assessment, and well-designed control activities enhance banks’ ability to address cyber threats and minimize system vulnerabilities. The results also emphasize the critical role of information and communication, as well as continuous monitoring, in strengthening responses to cyberattacks and ensuring compliance with relevant standards and regulations.

Purpose The objective of this study is to empirically examine the impact of financial innovation on bank risk-taking in the MENA region, while analyzing how this effect is influenced by different macroeconomic conditions. Design/methodology/approach Using a panel dataset covering 19 MENA countries from 2000 to 2021, the study employs robust econometric techniques, including ordinary least squares (OLS), fixed-effects (FE) and instrumental variable (IV) regressions, to examine the direct and conditional effects of financial innovation on bank risk. Financial innovation is measured using on patents and FinTech indicators, while macroeconomic conditions are captured through inflation, GDP volatility and financial liberalization. Findings The study shows that financial innovation reduces banks’ insolvency and earnings volatility risks, but simultaneously increases liquidity and funding mismatch risks. Furthermore, we show that the relationship between financial innovation and bank risk is highly dependent on GDP volatility, inflation and capital controls, such that the actual sign of the marginal effect changes. Financial openness also mitigates this relationship, but not enough to reverse the sign. Originality/value This article makes new contributions to the literature on the MENA region concerning the relationship between financial innovation and bank risk, and formulates recommendations for the MENA banks and policymakers.

Abstract Capital regulatory requirements are one of the prominent mechanisms to control bank credit risk-taking behavior and subsequently achieve financial stability. The study aimed to evaluate the moderating role of revenue diversification in the relationship between capital adequacy and credit risk behavior of 102 listed South Asian banks. We collected data from DataStream covering the period from 2011 to 2022. The study employed a fixed effect panel data model, system GMM, a two-step system dynamic panel estimation technique, and the Sargan test to analyze study results, resolve potential endogeneity problems, effectively use short time period and long cross-section dataset, and achieve instrument validity, respectively. We conclude that South Asian banks face low levels of credit risk and the interaction of revenue diversification with the capital adequacy ratio significantly and negatively reduces credit risk. The findings implicate little adverse selection problem among South Asian banks and the need for expanding non-traditional income sources while fulfilling regulatory capital requirements.

Purpose Islamic banks in the Middle East and North Africa nations are encountering challenges similar to those in microfinance, with certain countries, such as Lebanon, seeing stagnation in the growth of Islamic banking and finance. The objective of this study is to examine the effect of intellectual capital on credit risk and financial stability within the context of Islamic banks in the Middle East and North Africa region. Design/methodology/approach This study uses the generalized method of moments and the two-stage least squares method to conduct this research. It uses bank data from 972 observations from 2011–2022 in the Middle East and North African countries. Findings The findings show that human capital efficiency, relational capital efficiency, structural capital efficiency and modified value-added intellectual capital negatively correlate with credit risk. In contrast, all of these variables demonstrate a positive impact on financial stability. It suggests that enhancing intellectual capital is expected to contribute to mitigating credit risk, hence promoting excellent financial strength. Social implications By drawing attention to Islamic banks that require intellectual capital and financial stability, this study offers policymakers important information regarding the economic and social well-being of countries in the Middle East and North Africa region. Originality/value This study furnishes banks with information regarding the role of intellectual capital in enhancing financial stability through the mitigation of credit risk.

Asia presently houses some of the top and dynamic economies in the world. These economies have also experienced high fintech adoption in their banking sectors. This paper examines the impact of fintech adoption and integration on the efficiency and stability of banks in 9 Asian countries, using panel data from 85 banks spanning 11 years from 2014 to 2024. It first analyzes the impact of fintech on banks across all selected countries and then, on a stratified basis, divides them into three categories: developed economies, large economies, and emerging countries. The paper uses non-performing loan (NPL) and provision for loan losses (PLLs) as proxies for risk, efficiency ratios, and the cost-to-income ratio as efficiency measures, and the stability ratio and Z-score as indicators of stability. To estimate the results, it has applied ordinary least squares and fixed-effect techniques. The study finds that fintech adoption reduces associated bank risk, presents mixed effects on efficiency, and strongly supports bank stability. Moreover, total assets and ROA consistently demonstrate lower risk, higher efficiency, and greater stability. Overall, the results of this study indicate that fintech encourages greater competition, leading banks to lend more aggressively and, consequently, increasing NPLs, PLLs, and overall risk exposure. Based on the findings, this research suggests that policymakers may adopt fintech strategies to maximize the benefits.