ABSTRACT Financial technology (fintech) development has brought revolutionary changes to Chinese urban commercial banks (CUCB), and it is also an important force in preventing and controlling financial risks. This study uses the panel data regression analysis method, selects 134 CUCB from 2011 to 2023 as samples, and deeply discusses the impact and mechanism of fintech on the CUCB credit risk. The study found that first, the relationship between fintech and the CUCB credit risk is an inverted U-shaped curve. The early stages of fintech development increase the credit risk of banks, but as it develops, it helps reduce the credit risk. Second, the size of the board of directors of CUCB affects fintech’s impact. The larger the size of the board of directors, the more obvious the impact of fintech on credit risk. Third, further research found that fintech can effectively reduce credit risk by reducing the number of new branches opened by CUCB. Fourth, from the regional perspective, compared with the western region, the impact of fintech on the CUCB credit risk is more significant in the eastern and central regions. Fifth, the impact of fintech on the CUCB credit risk is more prominent than previously understood.

<div> Preferred Creditor Status and Credit Risk: Evidence from Multilateral Development Banks </div>

Climate policy uncertainty and bank risk management: Evidence from China

Validating bank risk models under trade war stress: a framework for adaptive stress testing with AI-driven calibration and cross-industry applications

The Macroeconomic Effects of Bank Regulation: New Evidence from a High-Frequency Approach

Financial technology has rapidly influenced financial services by using digital banking, blockchain, and other innovative areas, which ask about its effect on financial stability. This research looks at how using digital banking for financial transactions influences the stability of the banking industry in emerging markets, after taking other key economic trends into account. A panel of 16 countries taking data from 2011–2023 is studied using two separate fixed-effects driscroll and Kraay regressions taking the nonperforming loan (NPL) ratio and bank Z-score as indicators of stability as dependent variables. The study finds insignificant impact of Fintech on both proxies of financial stability. Bringing more operations into digital banking (shown by an increase in mobile money transactions) was not linked to a noticeable reduction in risk. On the other hand, traditional elements confirmed the results e.g., When trade is more open and credit is not expanding too fast in the private sector, this is associated with stabilized banks and low NPLs, but excess domestic credit linked to the private sector brings about higher NPLs and indicates risk for banks. The evidence points out that whether FinTech helps or hinders stability varies country to country and also depends on the situation.

The object of the study is the processes of cash flow management in the banking system of Ukraine, which is characterized by high dynamism, increased risks caused by war and economic instability, as well as rapid adaptation to digital technologies and European standards. The article emphasizes the critical importance of effective cash flow management to maintain financial stability and ensure uninterrupted operations of the bank in the face of uncertainty. Problem statement. The main problem studied in the article is the lack of efficiency of traditional methods of forecasting and managing cash flows in modern realities. These methods are unable to adequately process large amounts of data, take into account complex nonlinear dependencies, and respond quickly to unpredictable changes caused by both war and digital transformation. This creates liquidity risks, leads to suboptimal use of capital, and reduces the overall resilience of the banking system. Unresolved aspects of the problem. Today, there are gaps in the integration of the latest intelligent systems directly into the bank's operational and strategic processes. There are still unanswered questions about how to turn highly accurate predictions obtained through machine learning into concrete, managerial decisions that will minimize risks. Purpose of the article. The aim of the article is to develop comprehensive recommendations for improving cash flow management in a bank using intelligent systems. For this purpose, a three-dimensional approach is used, which combines Big Data analysis, improving the accuracy of forecasts using machine learning, and their integration into a management decision support system. Presentation of the main material. The authors of the article use a three-dimensional coordinate system of “analysis-prediction-integration” to structure the research. Practical examples for forecasting liquidity, assessing borrowers' solvency, and the effectiveness of marketing campaigns are considered. The use of LSTM, SVM, Random Forest, and RNN models to improve forecasting accuracy is detailed. To integrate the forecasting results into the bank's risk management system, specific solutions are proposed, such as the use of automated dashboards, early warning systems, and dynamic scoring. Conclusions. The recommendations proposed in this article allow banks to move from reactive to proactive cash flow management. This helps to significantly reduce operational risks, optimize capital, increase profitability and strengthen competitive positions. The practical value of the study lies in the provision of specific tools and scenarios for the implementation of intelligent systems in daily operations, which is extremely important for ensuring the financial stability of the Ukrainian banking system in the face of uncertainty.

Sharia financial institutions play an important role in identifying, measuring, and managing risks related to operations and financial products to ensure compliance with sharia principles. This study aims to determine how customer investment risk is developed at Bank Syariah Indonesia (BSI) and what is the appropriate evaluation model to address the risks that occur when investing in Bank Syariah Indonesia (BSI) Tamalanrea Branch, Makassar City. This study uses qualitative research with a descriptive approach and data collection methods through observation and interviews, as well as analysis tools that utilise data reduction. The results of the study show that, first, the development of investment risk in Islamic banks includes financing, market, and reputation risks, which must be managed effectively through comprehensive risk management. Second, the appropriate evaluation models to address the risks that occur when investing in the Indonesian Islamic Bank (BSI) Tamalanrea Branch in Makassar are Risk-Adjusted Return on Capital (RAROC) and Value at Risk (VaR), which are proposed to improve the bank's performance and transparency. This study provides insight into the importance of risk management techniques in supporting the growth and sustainability of Islamic banking in Indonesia.

This study aims to analyze credit risk and other control variables on the profitability of conventional banks in Indonesia. Profit is measured by return on assets (ROA), and credit risk is measured by Non-Performing Loan (NPL). In addition, this study examines the moderation effect of the COVID pandemic through the interaction between NPLs and COVID on ROA. The study uses conventional bank panel data in Indonesia for the period 2015–2023 using quarterly data and a dynamic panel regression approach. The results of the study found that NPL negatively affected ROA. The assets, LDR, and CAR had a positive effect on ROA, while CIR, GDP, and COVID had a significant negative effect on ROA. Interestingly, the interaction between NPLs and COVID showed a positive influence, indicating that the pandemic encouraged increased risk management effectiveness and banking operational efficiency. The implications of the findings of the positive effects of the interaction between credit risk and the pandemic on bank profitability are the need to affirm the role of adaptive policies and credit restructuring in maintaining the performance of the banking sector in times of crisis.

Globalization processes in the economic sphere are driving the growing need to update Ukraine’s legislative and regulatory framework for banking supervision in accordance with international standards. This is particularly important in the context of integrating Ukraine’s financial system into the global economic space, where the stability and transparency of banking operations are key factors in building trust among investors and partners. The article explores the evolution of capital requirements for operational risk in banks, particularly in the context of Basel Committee standards and their implementation in Ukraine. It examines approaches to assessing operational risk and the practical aspects of implementing new regulations, including their incorporation into national legislation, taking into account their advantages, limitations, and practical applicability within the Ukrainian banking system. The article summarizes the challenges and prospects for developing an operational risk management system, especially those arising during the adaptation of international norms to the national context, such as issues of methodological consistency, access to quality data, and the technological readiness of banks. It also analyzes the practical aspects of implementing new standards, including changes in internal policies, risk management systems, and reporting procedures, which require a comprehensive approach and inter-institutional cooperation. The article proposes ways to improve Ukraine’s regulatory requirements regarding the assessment of bank capital adequacy in line with international standards based on a risk-oriented calculation methodology. In particular, it emphasizes the importance of adapting Ukrainian regulations to the requirements of Basel III, which provides for more flexible risk management, increased resilience of banks to crisis phenomena, and the assurance of long-term financial stability. The implementation of such changes requires not only technical modernization but also the development of a new risk management culture focused on proactive threat identification and strategic planning. This will enable more effective capital management, enhance the transparency of financial reporting, and strengthen trust in the banking system from both international partners and domestic stakeholders.

Environmental, social, and governance (ESG) controversies have gained increasing attention due to their potential financial and reputational risks, particularly within the banking sector. As regulatory pressures and stakeholder expectations escalate, understanding the impact of ESG controversies on banks' risk-taking behavior is critical for financial stability and sustainable banking practices. This study investigates the relationship between ESG controversies and bank risk-taking, comparing Islamic and conventional banks within the Organisation of Islamic Cooperation (OIC) countries. Using a panel dataset covering 35 Islamic banks and 68 conventional banks across 11 OIC countries between 2013 and 2022, we apply a fixed-effects regression model to assess the influence of ESG controversy exposure on bank risk. The results demonstrate that Islamic banks are significantly less exposed to ESG controversies than conventional banks, reflecting the normative ethical underpinnings of Islamic finance. However, Islamic banks exhibit higher risk levels compared to their conventional counterparts. The regression analysis also reveals that, in both the full sample and the conventional bank sub-sample, fewer ESG controversies are significantly associated with lower risk-taking, thereby enhancing bank stability. However, this effect is absent in Islamic banks. These results highlight the critical role of institutional, cultural, and regulatory contexts in shaping how ESG controversies influence bank behavior. While ESG controversies may act as effective risk control signals in conventional banking systems, their impact appears attenuated in Islamic banks, where ethical principles are already embedded in financial practices.

The article examines monitoring and control of credit risk within the risk-oriented management framework of banking activities. The institutional framework is based on the COSO model (updated in 2017) and three lines of defense: business units provide initial identification and operational monitoring (first line), risk management and compliance units provide independent oversight through key risk indicators (KRI) and limits (second line), and internal audit provides effectiveness validation (third line). Credit risk management is divided into a strategic process of risk profile formation based on monitoring (continuous observation of portfolio quality, borrowers, early warning signals) and control (compliance with procedures, limits, corrective actions). Key tools include traffic-light systems for borrower risk profiling, stop-loss limits on product parameters, and escalation protocols triggered by limit breaches, with remediation plans required within 14-21 days for supervisory board review. These integrate with the bank's Risk Appetite Framework (RAF)/Risk Appetite Statement (RAS), as mandated by NBU Regulation No. 64, defining risk appetite as aggregate risks acceptable for strategic goals. A hierarchical monitoring model aligns RAF levels—risk capacity (capital/liquidity buffers against aggregate ECL), risk appetite (KPI/KRI thresholds for portfolios), risk tolerance (segment limits, zero tolerance for prohibited activities), risk profile (dynamic risk-return balance), and limits (hard/soft thresholds with triggers)—to specific monitoring objects, tools, and decisions like portfolio restructuring or capitalization. This structure ensures strategic coherence, transforming high-level appetite into operational controls under macroeconomic uncertainty, war risks, and Ukraine's financial transformations. Results propose this integrated model, enhancing real-time risk detection and response to prevent portfolio deterioration. Applicable to Ukrainian banks for RAF implementation, it supports NBU compliance, capital adequacy, and stability amid volatility. Conclusions emphasize monitoring and control as indispensable for risk management efficacy, bridging theoretical frameworks with practical tools to minimize losses and align operations with strategic objectives.

This study investigates the causes of insolvency in Islamic banks (IBs) through a qualitative multiple-case analysis of failed Islamic financial institutions (IFIs) in Turkey, Jordan, and South Africa. The selected cases İhlas Finans (IF), Islamic Bank Limited (IBL), Islamic Investment House (IIH), and Islamic National Bank (INB) are examined to identify key governance, regulatory, and Shariah-related weaknesses that contributed to their collapse. Data were collected from secondary sources, including regulatory reports, court records, and academic studies, and analyzed using thematic and comparative approaches. The findings reveal that inadequate governance, absence of comprehensive insolvency and recovery frameworks, and weak Shariah governance were central causes of institutional failure. Conflicts between national laws and Shariah principles further compounded the insolvency risks. The study contributes to the literature by providing a cross-jurisdictional understanding of insolvency risks in Islamic banking and proposing the need for structured resolution mechanisms aligned with Shariah principles. Policy recommendations are offered to enhance regulatory supervision, strengthen Shariah governance, and improve crisis preparedness within the Islamic banking sector.

The article presents the results of a study of theoretical and applied aspects of market and credit risk in the modern banking system. In the introduction, the relevance of the research is justified in the context of increasing financial instability, tightening regulatory requirements, and the growing impact of external shocks on banking activities. Particular attention is paid to the role of banks as key intermediaries between borrowers and investors and to the high vulnerability of the banking sector to systemic risks. The materials and methods section is based on the analysis and generalization of scientific literature, a comparative approach to assessing different types of banking risks, and the systematization of classical and modern risk management models. The methodological framework includes concepts of market risk and credit risk, as well as quantitative approaches to their measurement, including Value at Risk (VaR) and probability of default indicators widely used in banking practice. The results of the study reveal the key characteristics of market and credit risk manifestation in the banking system and demonstrate their interrelationship and impact on banks’ financial stability. It is shown that credit risk remains the dominant source of potential losses, while market risk primarily affects short-term financial performance of banks. The discussion emphasizes the importance of an integrated approach to banking risk management and the need to improve risk assessment tools under conditions of growing uncertainty. The study concludes that the systematization of market and credit risk assessment methods has practical significance for enhancing the overall stability of the banking system.

Purpose This study aims to analyze the role of accounting conservatism in reducing the financial risk performance of Islamic banking in Indonesia by examining the moderating effect of Islamic corporate governance, which consists of Sharia compliance and the good corporate governance index, as well as environmental disclosure. Design/methodology/approach This study took annual reports from Islamic banks listed on the Financial Services Authority as the main data. A total of 63 observations from 14 Islamic banks from 2017 to 2021 were used. Saturated sampling technique and moderated regression analysis were applied to analyze the data, supported by E-Views as the statistical tool. Findings Partially, although this study was unable to prove that accounting conservatism, Sharia compliance and environmental disclosure quality are determinants in reducing the risk of Islamic banking, this study successfully demonstrated that the implementation of good corporate governance can reduce the risk of failure in the financial disbursement at the bank. The results also indicated that neither Sharia compliance nor the good corporate governance index serves as a mediator in the relationship between accounting conservatism and risk performance. However, environmental disclosure quality demonstrated conversely, where it can moderate the relationship between accounting conservatism and risk performance. Research limitations/implications Theoretically, this study supports the agency theory, where the application of accounting conservatism can prevent corporate losses caused by financial activities, which ultimately helps to control bankruptcy risk. Additionally, this study also supports stakeholder theory and Sharia enterprise theory, asserting that Islamic banks should be accountable not only to primary stakeholders, but also to the broader environment and community. Originality/value This study investigates risk mitigation in Islamic banking linked with accounting conservatism as well as considering Sharia compliance, good corporate governance and environmental disclosure as moderating variables.

Digital finance has enhanced financial service accessibility, reduced costs, and disrupted traditional business models. Based on the functional view of finance, a theoretical model including commercial banks, households, and enterprises is constructed to analyze the impact of digital finance on bank efficiency and explore its mechanisms through liabilities and assets. In this paper, a three-dimensional framework including digital financial foundation, digital banking business and new financial services is constructed and a digital finance index is calculated to represent the development of digital finance at the city level. Then, using the stochastic frontier analysis (SFA) method, the efficiency of commercial banks is measured with the data of Chinese banks between 2011 and 2020. This empirical study shows that digital finance significantly improved the efficiency of China’s commercial banks. For every extra unit of digital finance, bank’s cost efficiency will increase by 0.72% and its revenue efficiency will increase by 3.17%. This conclusion is still valid after multiple robustness checks, including substitution of explanatory variables, cutting samples and regression with instrumental variables. These findings also indicate that the influence of digital finance on the change in bank efficiency varies across different regions, scales, and types of ownership, among which high GDP regions, large-scale banks, and state-owned banks have a relatively strong effect on efficiency. A further analysis of the mechanism shows that digital finance affects liability structure of banks, i.e., banks are usually inclined to have a smaller proportion of interbank liabilities as digital finance advances. Concurrently, digital finance also alters banking risks, which in turn affects their asset side. The core process through which digital finance enhances banking efficiency is more closely connected to the strong optimization impact of digital finance on the liability side than to weakening effect on the asset side.

This paper investigates the impact of bank-specific and macroeconomic factors on banks’ risk and return in Egypt and Saudi Arabia, the purpose of this paper is to conclude the risk and return sensitivity to macroeconomic factors and bank-specific in different economic environment; utilizing a panel dataset of largest 20 banks in Egypt and Saudi Arabia over the period 2008–2024. This research methodology employing System Generalized Method of Moments (GMM) to address endogeneity and dynamic relationships, the research measured bank-specific factor by capital adequacy, bank size, loan-to-deposit ratio, and operational efficiency; as well as external macroeconomic factors by Gross Domestic Product (GDP) growth, Inflation, and Interbank rates. The credit risk measured by non-performing loans (NPLs) and its provisioning, while return measured by return on assets (ROA), return on equity (ROE), and net interest margin (NIM). The findings highlight that there is significant impact of bank-specific and macroeconomic factor on risk for Egypt and Saudi Arabia except capital adequacy ratio and gross domestic product (GDP) for Egypt in addition, interbank rate and size were insignificant for Saudi Arabia banks. Moreover, the research pointed out significant impact of bank’s capital adequacy ratio, interbank rate, loan to deposit ratio and operation efficiency on bank return in Egypt; in addition, the return influenced significantly by capital adequacy ratio and operation efficiency only in Saudi Arabia while, macroeconomic factors have insignificant impact on Bank’s return in Saudi Arabia. Egyptian banks risk and return show sensitivity to bank-specific and macroeconomic factors, while Saudi banks exhibit greater stability and resilience against macroeconomic shocks and less sensitivity to internal factor.

Purpose This study examines the impact of IFRS 9 adoption on bank stability in Africa, with a special focus on the role asset and earnings quality play on bank stability following its adoption in 2018. Design/methodology/approach The study utilises panel data drawn from 554 banks in 43 African countries over the period 2014–2021. Various econometric analyses are performed using two-sample tests and two-step GMM regression for data comprising 3,510 firm-year observations. Findings The findings, which are robust for endogeneity and the adverse effects of COVID-19 pandemic on bank stability, reveal potential cross-country heterogeneity relating to the effects of IFRS 9 adoption, asset and earnings quality on bank stability. There seems to be a limited influence of IFRS 9 adoption on the stability of banks in Africa. The results reveal that declines in asset quality negatively impact bank stability, while improved earnings quality is effective in promoting bank stability. Increases in nonperforming loans are associated with increased bank risk, which is cushioned through improved earnings quality following IFRS 9 adoption, thereby boosting bank stability. Research limitations/implications The study argues that since the IFRS 9 adoption was more of a conciliator between the interests of both bank regulators and accounting enforcement agencies, the adoption of the standard is likely to contribute to a relatively stronger financial services sector, especially in developing economies. The study cautions regulators not to employ a “straight-jacket” approach in implementing the standard and its consequent pronouncements. Practical implications The study is useful in informing accounting regulators, bank managers, auditors and financial reporting managers of banks as to the implications of IFRS 9 adoption. Originality/value This is perhaps one of the few studies to examine a large dataset illustrating the implications of the mandatory adoption of IFRS 9 in developing and emerging economies.

Purpose: The purpose of this study is to examine the impact of the Financial Services Authority Regulation POJK 51/2017 about Sustainable Finance implementation on bank risk in Indonesia. The regulation mandates all commercial banks to integrate environmental, social, and governance principles into their strategic and operational frameworks. However, empirical evidence regarding how this policy affects financial stability remains limited. This research addresses that gap by analysing both the direct and indirect effects of the regulation on bank risk. Method: This study employs a quantitative method with a difference-in-differences approach to analyse the causal impact of implementing POJK 51/2017 on bank risk. The data used is a panel of 22 banks for the period from 2015 to 2024. In addition, a mechanism test is conducted to explore transmission channels through green credit and cost efficiency, as well as a heterogeneity test to measure differences in impact across bank size and ownership type. Findings: The research found that the implementation of POJK 51/2017 increased banking risk. Furthermore, a mechanism analysis showed that the green credit ratio serves as a transmission channel through which regulations influence risk, while the operational efficiency ratio does not. Furthermore, the impact is greater for small banks and state-owned banks. Implications: Banks must adopt risk-based green lending, especially for MSME-oriented projects that have higher information risks, while the Financial Services Authority should strengthen risk-based supervision by assessing the risk profile of green exposures rather than solely focusing on green credit volume. Novelty/Value: This study offers new empirical evidence by applying a difference-in-differences design to capture the causal impact of POJK 51/2017 on bank risk. It also identifies the green credit ratio as a main transmission channel and reveals differential risk effects across bank size and ownership, providing new insights into how institutional capacity shapes sustainable finance regulatory outcomes in Indonesia.

This study analyzes the impact of financing risk and bank size on the efficiency of Islamic Commercial Banks (BUS) in Indonesia from 2018 to 2024. Efficiency is measured using the Data Envelopment Analysis (DEA) method with an intermediation approach, while panel data regression is used for hypothesis testing. The Common Effect Model (CEM) is identified as the best fit. Results show that financing risk (NPF) negatively affects efficiency, while bank size (TASET) has a positive effect. These findings highlight the importance of effective risk management and asset scale optimization in improving the operational efficiency of Islamic banks.