Issue #2 (Volume 20 2025)

This study analyzes the effects of environmental, social, and governance (ESG) controversies and the presence of women on boards on ESG-washing practices in the global banking sector. ESG washing is a manipulative practice in ESG disclosure where companies highlight positive information to conceal poor sustainability performance. This study employs a panel dataset from 279 public banks in 67 countries, covering five major regions – Asia, Europe, Africa, America, and Oceania – over the period 2011 to 2023. Data were obtained from Refinitiv Eikon and Bloomberg for bank-level information, as well as the World Bank for macroeconomic data. The results show that ESG controversies significantly drive ESG washing. Banks involved in controversies tend to use manipulative ESG disclosures to protect their reputation and mitigate the impact of scandals. Conversely, the presence of women on the board has a significant mitigating effect on ESG washing. This study also identifies a critical mass effect, where the positive influence of women on boards in reducing ESG washing becomes optimal when their representation reaches a certain level. These findings have important implications for policymakers and regulators to promote inclusive governance and sustainability transparency, particularly through increasing gender diversity on boards of directors. Furthermore, these results indicate that good governance, supported by adequate representation of women, can help combat unethical practices such as ESG washing in the global banking sector.

Dispute resolution in Islamic banking presents unique legal and procedural challenges due to the dual requirement of compliance with national laws and Islamic Sharia principles. This study aims to evaluate the legal and practical effectiveness of arbitration in resolving Islamic banking disputes, particularly in terms of efficiency, compliance with Sharia, and institutional trust. A qualitative approach was employed, based on semi-structured interviews with 12 domain experts, including Islamic banking professionals, arbitrators, legal advisors, and Sharia scholars, each with 10–25 years of experience in relevant fields.
The findings indicate that 83% of respondents (10 out of 12) believe arbitration is more efficient than litigation in Islamic banking disputes, particularly in terms of speed and confidentiality. 75% of participants identified the lack of codified Sharia-compliant arbitration frameworks as a major limitation to broader adoption. Meanwhile, 67% emphasized the absence of a unified Sharia Supervisory Board as a critical institutional gap affecting arbitration legitimacy. Furthermore, 58% of experts pointed to weak trust in arbitration outcomes among financial institutions as the key reason arbitration clauses are often excluded from contracts.
Despite these barriers, 92% of respondents agreed that arbitration has high potential to resolve Islamic banking disputes effectively if institutional and legislative reforms are implemented. The study recommends establishing standardized arbitration protocols, enhancing regulatory oversight, and developing Sharia-aligned legal infrastructure.
These insights contribute to the broader discourse on Islamic finance governance and offer practical recommendations for policymakers, arbitration centers, and financial institutions seeking to enhance dispute resolution mechanisms in line with Sharia principles.

Acknowledgment
The authors are thankful to the Deanship of Graduate Studies and Scientific Research at the University of Bisha for supporting this work through the Fast-Track Research Support Program.

The COVID-19 pandemic has affected bank lending growth to the point of decreasing banking profitability. Therefore, this study aims to analyze the differences in the performance of conventional banks and Islamic banks before and after the COVID-19 pandemic in Indonesia. This study uses secondary data with a quantitative approach. The performance is measured using four financial ratios: CAR, ROA, LDR or FDR, and BOPO. The population in this study is conventional banking and Islamic banking in Indonesia. The observation period for this study starts from pre-COVID-19 in June 2016 to March 2019 and post-COVID-19 from March 2020 to June 2023. The hypotheses were tested using the paired T-test and the one-sample Kolmogorov-Smirnov test for normally distributed data. The results of the one-sample Kolmogorov-Smirnov test on conventional banks show that whether there is a distinction between the performance of conventional banks and Islamic banks before and after the COVID-19 pandemic in Indonesia. The results of the graphic investigation indicate that there are financial ratios that have experienced an increase in performance, to be specific the CAR, ROA, and BOPO proportions, whereas the FDR or LDR tend to encounter a decrease in performance after COVID-19. There was an increase and decrease between before and after the outbreak of the COVID-19 pandemic in each proportion, which is still in the category with healthy and good banking qualification.

Acknowledgment
The substantial financial support for this study through the HIT funding scheme, provided by the Research and Innovation Institute (LRI) of Universitas Muhammadiyah Surakarta, is greatly appreciated by the authors.

This study examines the important but underexplored link between liquidity levels and profitability in commercial banks in Cambodia, a topic of great relevance for both bank managers and policymakers seeking to bolster financial stability. By analyzing data spanning 12 years (2011 to 2022) from 22 banks, the study applies a variety of panel data models, such as pooled ordinary least squares (OLS), fixed effects (FE), random effects (RE), and the one-step generalized method of moments (GMM). The findings reveal a statistically significant negative impact of liquidity on profitability across all static panel data models, with coefficients of –1.3005 (pooled OLS), –0.9786 (FE), and –0.9966 (RE), each statistically significant at varying levels. The dynamic panel data model (one-step GMM) further confirmed this negative relationship, showing a coefficient of –0.3588. It also highlighted a robust positive effect of lagged profitability, with a coefficient of 0.7491. Interestingly, the study found that only bank-specific factors, such as operating expenses and net interest margin, consistently influenced profitability across both static and dynamic panel models. On the other hand, macroeconomic factors like inflation were shown to negatively affect profitability, underscoring the need for sound bank management practices and well-designed regulatory policies.

Acknowledgments
We sincerely appreciate the financial support from the management of CamEd Business School, which made it possible for us to submit this paper for publication.

This study investigates the key factors influencing the probability of bankruptcy among rural banks in Indonesia, concentrating on internal, industry-specific, and external factors. The study analyzes 1,391 conventional rural banks in Indonesia from 2019 to 2023, resulting in 6,919 bank-year observations. This study uses financial and regional macroeconomic data and applies a population-averaged logistic regression model on a balanced panel dataset. The results indicate that internal factors play a significant role in determining the probability of bankruptcy. In contrast, industry characteristics, which are competition and regulation, and external factors, such as economic growth, do not exhibit a substantial impact. Rural banks characterized by inadequate capital and low profitability are at a heightened risk of insolvency, exacerbated by a significant proportion of non-performing loans. Excessive liquidity paradoxically leads to insolvency, as it indicates the presence of underutilized assets, increasing the chance of failure. These findings confirm that policies encouraging underperforming rural banks to merge with solid rural banks are suitable. These strategies promote a more robust rural banking ecosystem and effective regulatory control by decreasing the number of rural banks.

Acknowledgment
This research was funded by Hibah BIMA Kemendikburistek, grant number 0008/LPPM/UP/VI/2024.

Banking crises have posed recurring global challenges over the past decades. The purpose of the article is to identify common patterns among countries after banking crises by clustering them based on the trajectories of key macroeconomic indicators and underlying dynamics during critical post-crisis periods. The study analyzes 50 selected countries based on historical banking crises, data availability, and balanced regional representation. Six crisis peaks are identified: 1990, 1998, 2008, 2015, 2020, and 2023. Recovery is assessed through 12 macroeconomic indicators – GDP growth, investment, government debt, unemployment, poverty, and banking sector health – sourced from World Bank data. Z-score standardization was applied in STATA 19.5. Using Sturges’ rule and Ward’s method in STATGRAPHICS 19, the clustering revealed country groups sharing similar crisis and post-crisis recovery patterns. The analysis of these 7 formed clusters and countries belonging to each allows us to determine common patterns explained through explicit and implicit common features. Explicit characteristics cover geography, development level, crisis timing, and implicit factors are financial market exposure, banking structures, commodity dependence, policy frameworks, etc. Key findings include persistent groupings (e.g., Albania remaining in the same cluster), countries in prolonged crisis (e.g., Ukraine, Venezuela), stable pairings (e.g., Argentina-Uruguay; Azerbaijan-Iraq-Qatar), and cluster shifts (e.g., Sweden, USA, Malaysia transitioning across crises). Positive recovery cases such as Iceland, Sweden, the USA, Norway, Malaysia, and Argentina demonstrate effective resolution strategies. These insights may inform future crisis response frameworks by identifying successful policy approaches and vulnerabilities tied to institutional and structural dynamics.

This study investigates the empirical effects of implementing the Expected Credit Loss (ECL) model under IFRS 9 on capital budgeting decisions within the Jordanian banking sector. The analysis is based on a full population of all 13 Jordanian commercial banks listed on the Amman Stock Exchange from 2013 to 2023. Using panel data regression models, the study evaluates changes in three key financial ratios: Capital to Assets (CA), Equity to Assets (EA), and Loans to Assets (LA).
The findings reveal that adopting the ECL model led to a statistically significant increase in CA by 0.3% (p = 0.04), suggesting that banks have strengthened capital buffers in anticipation of higher provisioning requirements. Conversely, the EA ratio declined sharply by 1.1% (p < 0.01), indicating equity reallocation to absorb credit risks. Most notably, the LA ratio fell by 3% (p = 0.006), highlighting a more conservative lending approach post-ECL implementation. Each model exhibited strong explanatory power (R² values between 0.79 and 0.87), supporting the robustness of the results.
These outcomes confirm that IFRS 9 has triggered a structural shift in how Jordanian banks manage capital and credit risk. The study underscores the critical need for adaptable capital strategies in emerging markets, where regulatory changes like IFRS 9 can significantly reshape financial behavior and resource allocation.

As financial intermediary institutions, banks operate in a dynamic and complex environment influenced by internal and external factors and various risks that impact their financial performance. This study aims to examine the influence of bank-specific and macroeconomic variables that affect credit risk and Indonesian conventional commercial banks’ financial performance. Structural equation modeling is used to analyze time series data from quarter 1993 to quarter 2023. This analysis covers conventional commercial banks registered in Indonesia, namely Bank Mandiri, Bank Rakyat Indonesia, Bank Negara Indonesia, and Bank Tabungan Negara. The results of the study indicate that conventional commercial banks in Indonesia can manage their specific variables effectively so that financial performance increases and non-performing loans decrease. In addition, the stability of economic conditions contributes to an increase in the volume of available loans, allowing commercial banks to earn higher income from loan interest. Therefore, the banking sector can benefit from some recommendations made in this study, especially concerning conventional commercial banks in Indonesia.

In today’s data-driven economy, banks face growing pressure to enhance their competitiveness through evidence-based strategic management. This study investigates the role of human resource analytics in fostering bank competitiveness within the Jordanian banking sector. Specifically, it explores the mediating role of data-driven decision-making and the moderating impact of organizational agility. The study employed a quantitative approach, surveying 293 manager-level professionals from departments such as human resources, planning, and risk management in Jordanian banks. Data were collected via an electronic survey conducted between October and December 2024. A five-point Likert scale captured participants’ perceptions of HR analytics, data use in decision-making, organizational agility, and competitiveness. Partial least squares structural equation modeling was utilized to test the model’s direct and indirect relationships. The results provide strong empirical support for all five hypotheses. HR analytics was found to significantly influence bank competitiveness (β = 0.432, p < 0.01) and data-driven decision-making (β = 0.421, p < 0.01). Data-driven decision-making had the strongest direct effect on competitiveness (β = 0.485, p < 0.01). Indirect effects revealed a significant mediating role for data-driven decision-making (β = 0.312, p < 0.01), while organizational agility was shown to positively moderate the HR analytics-competitiveness relationship (β = 0.297, p < 0.01). These findings highlight the strategic value of HR analytics in enhancing decision-making processes and emphasize the role of agility in unlocking its full potential. The study contributes valuable insights for banking leaders seeking to align HR analytics with competitive strategy in dynamic environments.

Bank capitalization is a key factor in the banking system’s resilience to economic shocks, as outlined in the Basel Accords on banking regulation. The paper aims to empirically evaluate the connection between bank capitalization and the socio-economic development level. The study uses World Bank data across 34 European countries of varying income levels (high, upper-middle, and lower-middle) for the years 2010, 2015, and 2020 as periods of financial and socio-economic turbulence. The study applies principal component analysis and correlation methods to identify relevant indicators. Countries were grouped using hierarchical clustering and K-means clustering methods. The results of the variance analysis revealed that only two indicators of bank capitalization – the share of non-performing loans and return on assets, and three socio-economic indicators – the Gini index, inflation, and unemployment, were statistically significant. As a result of both qualitative and quantitative changes between clusters, countries were reallocated from four clusters in 2010 and 2015 to three clusters by 2020: high-income countries, including Austria, Belgium, Denmark, Ireland, Iceland, Latvia, and others, consolidated into a single stable cluster (Cluster 3) in terms of both bank capitalization and socio-economic development. The primary drivers of inter-cluster movements were the positive dynamics of non-performing loans and bank assets, superior bank capitalization ratios, and improvements in inflation and unemployment levels. Based on the study’s findings, a matrix of transformational sustainability among European countries has been developed. The analysis confirms a relationship between the components of the chain: “level of bank capitalization – level of socio-economic development”.

The study examines decisive elements affecting Business Intelligence (BI) acceptance within e-banking operations in Jordan by analyzing how IT infrastructure, data analytics competency, cybersecurity preparedness, and regulatory alignment impact the process. A series of questions were asked to 374 staff members from IT departments and compliance teams, as well as data analysis divisions representing Islamic and commercial banks in Amman, Jordan. The research period spanned from March to July 2024, while SEM was the analysis method. The study found that IT infrastructure (β = 0.38, p < 0.001) and data analytics capability (β = 0.45, p < 0.001), along with cybersecurity (β = 0.41, p < 0.001), positively influence BI adoption. The impact of regulatory compliance failed to reach statistical significance with a coefficient of 0.22 (p = 0.07). The success of BI implementation in Jordanian banks relies mainly on technology hardware capabilities, together with internal company resources, yet strict regulations pose obstacles unless they support a bank’s mission. The business solutions identified through this research will help banking leaders and software developers, together with government officials, to improve data-driven decision systems in Jordan’s financial market.

This study investigates the key determinants of bank financial performance in the Arab Levant region from 2017 to 2023, focusing on profitability and market valuation, while analyzing internal and external factors, including inflation, capital adequacy, and bank size, amid the unique regional economic dynamics post-Corona Virus Disease in 2019. The study sample comprises 15 Jordanian, 6 Palestinian, 5 Lebanese, and 13 Syrian banks. A descriptive analytical method and STATA were used for the hypothesis testing. The results reveal that inflation, bank type, country, bank size, and capital adequacy positively influence profitability, whereas liquidity ratio negatively affects profitability. Other variables, such as gross domestic product growth rate, country, bank age, operational efficiency, coronavirus, and financial inclusion, have no significant impact on profitability. Additionally, the pandemic and financial inclusion had a statistically negative effect on market valuation, whereas the other variables had no significant influence. This study provides fresh insights into bank performance in the rarely studied Middle Eastern markets by exploring profitability and market valuation within a unique pre- and post-pandemic context, thus enriching our understanding of bank performance in emerging economies. It offers actionable strategies for policymakers and managers to enhance profitability, market value, and resilience by focusing on fintech and equitable financial practices to support societal resilience and economic stability in conflict-affected, emerging economies.

Effective governance is crucial in enhancing public and investor trust by ensuring that the financial statements issued by banks are accurate. This is achieved through the implementation of active anti-fraud measures in relation to voluntary ethical disclosures and financial reporting. This study aims to examine the impact of corporate governance and voluntary ethical disclosure on financial reporting in the banking sector in Indonesia during the COVID-19 pandemic. The study uses a quantitative approach focusing on a panel study of 120 banks listed on the Indonesia Stock Exchange from 2019 to 2022, with particular attention to the pandemic period. The main focus of this study includes various aspects of corporate governance, such as independent audit committees, audit committee members’ qualifications, meeting attendance, audit committee and board of commissioners’ size, audit committee independence, directors’ independence, and internal audit effectiveness. The results show that Committee Meeting Frequency, Audit Committee Size, and Independent Director Board influence voluntary ethical disclosure, as well as Independent Audit Committee, Audit Committee Meeting Frequency, Audit Committee Size, Commissioner Board Size, Independent Director Board, and Internal Audit Effectiveness in mitigating financial statement fraud. Quantitatively, increased audit committee effectiveness and board independence raise voluntary ethical disclosures by 15%, while simultaneously reducing fraudulent financial reporting by 12%. Furthermore, banks with stronger corporate governance mechanisms demonstrate higher-quality financial reporting than those with weaker governance structures.

This study aims to examine the impact of credit risk on the cash dividend policies of banks listed on the Palestine Stock Exchange from 2015 to 2021. Credit risk is measured using the ratio of non-performing loans to total loans and the ratio of total loans to total assets as key indicators. The study also explores the effect of other factors, such as return on assets, return on equity, profit margin, bank size, and bank age, as additional determinants of dividend policies. OLS with multiple regression analysis was used to evaluate the relationship between the independent variables and the dependent variable. The results showed no statistically significant effect of credit risk on dividend distributions, indicating that financial performance indicators play a more crucial role in dividend decisions. A weak positive relationship between credit risk ratios and dividend distributions was observed, but it was not statistically significant, suggesting that credit risk is not a fundamental determinant of dividend policies. These findings align with signaling theory, suggesting that dividends in the Palestinian banking sector do not clearly reflect credit risk due to market inefficiencies. The study highlights the importance of financial indicators in determining dividend policies, the stability of dividend distributions in older banks, and the need for strong regulatory frameworks, while recommending further research on other determinants such as ownership structure and digital transformation.

Acknowledgments
We sincerely thank Palestine Technical University – Kadoorie for their generous financial and moral support throughout the course of this research.

Climate change has become a major focus of discussion around the world. The impact of climate change has been felt in various sectors, including banking. This study aims to analyze the effect of climate change and political connections on bank financing and financial stability in the Indonesian banking sector. The study used a sample of banks listed on the Indonesia Stock Exchange. The data used in the study were 2,379 observations, taken from 2010 to 2023. Hypothesis testing was performed using the fixed effects regression model (FEM) with robust standard error. The results show that climate change has a significant negative impact on bank financing and indicate that banks should consider the risks associated with climate change when making financing decisions. In addition, political connections have a negative effect on bank financing, implying that banks tend to reduce financing to politically connected firms, possibly due to concerns about poorer risk management. On the other hand, product diversification showed no significant effect in either model. These findings highlight the importance of considering environmental and political factors in banks’ financing strategies to enhance financial stability amid the challenges posed by climate change and political dynamics. This study provides new insights for regulators and practitioners in formulating policies.

Acknowledgments
The greatest appreciation is conveyed to the Directorate General of Higher Education, Research, and Technology, Ministry of Education, Culture, Research, and Technology, which has provided funding support for this research through a principal research grant with contract number 108/E5/PG.02.00.PL/2024. Thanks are also expressed to the Higher Education Service Institute (LLDIKTI) Region 6 and the Institute for Research and Community Service (LPPM) Unisnu Jepara, Indonesia, for their continuous support and facilitation during the research process.

This article highlights the results of a study investigating whether the growth of syndicated loan activity among US commercial banks was driven by measurable operational cost savings through blockchain-powered back-office automation. Quarterly data from Q1 2010 to Q4 2024 on syndicated loan stocks, commercial and industrial loans, real GDP, bank assets, and non-interest expenses were obtained from the Federal Reserve System’s FRED database. A dummy variable was applied after 2016 to denote the implementation of the first production-level Distributed Ledger Technology (DLT) pilots. Using the Autoregressive Distributed Lag Model (ARDL) bounds testing approach, evidence of cointegration is found and long-run elasticity is estimated: a steady 1% increase in the volume of syndicated loans reduces the operating expense ratio by 0.147%, which means that almost doubling the volume of loans in the resulting sample leads to approximately 15% structural reduction in the burden on banks’ back offices. The associated error correction model gives a short-run elasticity of –0.276 (i.e., a 1% quarterly shock to loan volume reduces expenses by 0.276 p.p.) and a 47% correction rate to a new equilibrium. Diagnostic tests confirm the absence of sequential correlation and resistance to heteroscedasticity by White’s standard errors. System-wide process improvements were evaluated by examining Hyperledger Fabric’s permissioned channel blockchain, smart contract automation, and multi-signature approval policies, which together simplify Know Your Customer (KYC) document workflows and settlement processes. The findings provide empirical evidence that enterprise DLT platforms deliver significant cost reductions for syndicated loan transactions, with implications for bank, fintech, and regulatory strategies.

Solving climate change issues has become the most essential topic in all areas of business and activity. Even central banks take action to enhance climate risk management. Central banks are taking action to regulate the financial system and manage foreign reserves by implementing green investments in their own and monetary portfolios, thereby utilizing their direct functions. This paper aims to identify the primary areas of focus for central banks in climate risk management by systematically reviewing and consolidating existing scientific papers, identifying research gaps, and highlighting areas that require further investigation. Using bibliometric and content analysis, the study examines the primary areas in which central banks can contribute to addressing climate change challenges. Using Web of Science data in this research, 503 English-language articles on “climate risk” were analyzed, and the scope was then narrowed by analyzing articles using the keywords “climate risk banks,” which limited the research area to 320 articles. The analysis reveals that central banks are increasingly integrating climate risk management into their policy frameworks, employing stress tests and disclosure guidelines to enhance the resilience of financial institutions. The findings reveal a significant gap in scientific research on the role of central banks in climate risk mitigation through foreign reserve management, despite their primary responsibility for managing climate risks within the banking system. This study underscores the necessity for enhanced risk assessment methodologies and collaborative regulatory efforts, thereby advancing the scientific discourse and informing the development of practical policies.

Grounded in the financial development-economic growth nexus, this study aims to explore the role of Islamic banking in shaping sectoral economic growth in Indonesia. Specifically, it examines the effects of Islamic bank financing (IBF) and non-performing financing (NPF) on sectoral GDP to identify variations in their impact across key sectors. Using quarterly time-series data from 2011Q1 to 2024Q3, the Autoregressive Distributed Lag (ARDL) model was employed to examine short-term and long-term relationships. Findings reveal sector-specific variations in the effects of IBF and NPF. In the long run, IBF has a significant positive impact on the education sector (13.13), health (3.95), accommodation (3.30), and construction (2.73). In contrast, IBF shows a significantly negative effect in agriculture (–87.65), fisheries (–21.49), and real estate (–5.04). NPF generally shows negative effects on sectoral GDP, particularly in accommodation (–136.67), education (–1122.11), and manufacturing (–215.75), while showing unexpected positive effects in health (234.46) and real estate (7.50). Short-term analysis highlights both positive and negative effects of IBF and NPF, with notable variations across sectors where IBF boosts GDP in health (2.73) and sales (3.04), but negatively impacts manufacturing (–2.38) and fisheries (–8.04); NPF has a short-term negative effect in accommodation (–90.38) and education (–433.93), with lagged positive adjustments in some sectors. Lagged effects of NPF suggest delayed financial adjustments and sector-specific recovery patterns. These findings provide sector-specific empirical insights that can inform the design of more effective Islamic financial policies and targeted interventions to support inclusive and sustainable economic growth.