Issue #3 (Volume 20 2025)

The implementation of corporate social responsibility (CSR) has evolved significantly in recent years, shifting from philanthropic objectives to strategic integration in Vietnam. The Government has determined the transition toward a green economy, highlighting the role of the banking industry in promoting green credit. However, adopting CSR requires a comprehensive understanding of its impact and whether it is merely a compliance cost or a strategic tool for enhancing financial stability. This study, therefore, examines the impact of CSR on the financial stability of listed commercial banks in Vietnam. Using an aggregate CSR index and its two specific dimensions, environmental and social, constructed through content analysis, the study evaluates their impact on the financial stability measured by the Z-score index. Ordinary least squares, fixed and random effect regression, feasible general least squares regression, and system generalized method of moments are applied to the sample of 19 banks over the period from 2013 to 2022. The findings demonstrate a positive relationship between social and environmental initiatives and financial stability, with the environmental pillar showing a particularly strong effect. Specifically, a 1 percent increase in CSR and environmental indices results in increases of 2.361 and 1.327 units in the Z-score, respectively. Eco-friendly practices in banking enhance financial stability, while the social dimension shows a more nuanced impact. The findings of this study provide implications for bank managers and government authorities in developing and promoting CSR practices.

Acknowledgment
The authors gratefully acknowledge the financial support from the Banking Academy of Vietnam.

Type of the article: Research Article

Abstract
This study is motivated by the rise of the Fintech sector and its relevant role in the growth and development of the banking sector. Its purpose is to examine the influence on price formation between indices related to Financial Technology companies (Fintech) and regional stock markets in Europe, emerging markets, Latin America, and the United States. The study uses the Gregory-Hansen test to assess the long-term comovements between the main Fintech-related and regional stock indices. The results indicate that the characteristics of assets as hedging instruments can change over time and in different circumstances. During the pre-conflict period, 26 long-term comovements were identified between the Fintech indices and the regional stock markets, and 31 long-term comovements were identified during the conflict period. The Emerging Markets, Latin America, and S&P 500 stock indices were considered full hedging assets but partially lost these characteristics during the Conflict period. In the conflict sub-period, the European regional stock market displayed the characteristics of a hedging asset, as it did not influence the prices of any of the indices analyzed. The study’s implications suggest that assets behave differently in different market conditions, so investors must adapt their asset allocation strategies to manage risk efficiently and build resilient investment portfolios. These findings are also relevant for financial institutions, particularly banks, as they continue to integrate Fintech-driven innovations into their business models and risk management frameworks.

Acknowledgments
The authors are also pleased to acknowledge the financial support from Instituto Politécnico de Setúbal. 

Type of article: Research Article

Abstract
The mobilization of banking sector capital is increasingly viewed as a pivotal component of the global transition to renewable energy sources (RES), given the sector’s capacity to finance capital-intensive projects. However, banks typically favor investments and lending opportunities that offer predictable cash flows and low default risk, characteristics often lacking in RES projects without policy support. This study investigates whether the development of the banking sector facilitates the uptake of RES and how feed-in tariffs (FiTs), which provide guaranteed purchase periods and stable prices, modify this relationship. Using a panel dataset of 66 countries (selected based on data availability, allowing robust results that may be cautiously applied to countries with comparable financial and institutional contexts) from 2000 to 2020, fixed effects regression models with time dummies and robust standard errors are employed. The analysis finds that banking sector development alone does not lead to increased consumption from RES (coefficient = 0.0011, p = 0.950), suggesting that banks are reluctant to invest in renewables due to the lack of mechanisms to guarantee returns. The standalone introduction of FiTs is associated with a temporary decrease in RES uptake (coefficient = −5.07; p < 0.001), likely reflecting initial market distortions. However, when FiTs are implemented in countries with a more significant economic role of banks, the interaction yields a significant positive effect (coefficient = 0.0412; p < 0.001), indicating that FiTs reduce investment risk and unlock bank financing for RES. The model explains 20.8% (R2=0.208) of within-country variation, and fixed effects vary substantially, underscoring structural differences across countries.

Type of article: Research Article

Abstract
Poverty remains a pressing challenge in developing economies, an necessitating analysis of financial and macroeconomic drivers of poverty reduction. Financial inclusion, particularly through access to savings and credit, has gained prominence as a pathway for households to build resilience, smooth consumption, and invest in productive ventures. This study examines the short-run and long-run effects of savings and credit from deposit money banks (DMBs) and microfinance banks (MFBs) on poverty reduction in Nigeria, with poverty headcount as the dependent variable. The Autoregressive Distributed Lag (ARDL) model was employed, using time-series data obtained from reputable national and international organizations. Findings show that DMB savings significantly reduce poverty in both the short run (coefficient = 0.0077, p = 0.0389) and long run (–0.0393, p = 0.0036), emphasizing their role in mobilizing resources that enhance household welfare. DMB credit also reduces poverty in the short run (0.0031, p = 0.0005) and demonstrates marginal long-run significance (0.0199, p = 0.0914), reflecting its contribution to productive opportunities. By contrast, MFB savings show only weak short-run significance (–0.0059, p = 0.0799) and no long-run effect (–0.0393, p = 0.2366), while MFB credit remains insignificant in both the short run (0.0025, p = 0.3973) and long run (0.0155, p = 0.5222). The study recommends that DMBs should extend short-term savings benefits into long-term poverty reduction and sustain credit facilities. MFBs should improve savings mobilization through government-backed incentives and restructure credit with lower rates, flexible repayment, and financial literacy to strengthen their poverty-reduction role.

Acknowledgment
We appreciate Landmark University for providing the platform and funding for this research work. We appreciate your involvement.

Type of the article: Research Article

Abstract
This paper empirically analyzes the influence of the Shariah Supervisory Board (SSB) and its characteristics on the disclosure of the Islamic Corporate Ethical Identity (ICEI) among 42 Islamic banks in Qatar, Indonesia, Saudi Arabia, Malaysia, the United Arab Emirates, and Turkey (collectively referred to as QISMUT) during the period 2019–2023. The study employs text analysis to measure the extent to which ICEI information is disclosed in these banks’ annual reports, demonstrating a significant increase in such disclosures over the analyzed period.
The study utilizes descriptive statistics to provide a foundational understanding of the trends in ICEI reporting. Furthermore, it applies multiple regression analysis to ascertain the relationship between SSB characteristics and ICEI disclosures, controlling for variables such as bank size, financial performance, and economic performance.
The findings reveal significant disparities in ICEI disclosure rates, with Turkey exhibiting the lowest levels and Saudi Arabia the highest. This variation indicates a notable deficiency in the emphasis on ICEI among Islamic banks within the region. Additionally, the study highlights a positive correlation between SSB characteristics and ICEI disclosure levels. Banks with larger SSBs, possessing diverse expertise, intellect, and reputable credentials, tend to show higher ICEI disclosure levels. This suggests that effective SSBs enhance the governance of Islamic banks, promoting adherence to Islamic ethical standards. However, intriguingly, the study finds a significant impact of ICEI disclosure on the financial performance of these banks. In conclusion, Islamic banks should strengthen governance and improve communication about ICEI disclosures to enhance transparency, accountability, and alignment with Islamic values, boosting financial performance.

Type of the article: Research Article

Abstract
The banking and financial system of the countries of the world is constantly developing, but at different rates and ways, given their differences in the levels of economic, financial, and innovation development. The purpose of this article is to identify factors that link upper-middle- and high-income countries in terms of banking ecosystem digitalization, based on cluster analysis. The research sample includes 40 countries – 20 top-performing upper-middle-income and 20 high-income economies – based on the 2023 ICT Development Index. The analysis is based on 15 standardized indicators characterizing digitalization in the banking ecosystem, sourced from the International Monetary Fund, the World Bank, and the International Telecommunication Union. These indicators cover ICT development, AI readiness, cybersecurity, GovTech maturity, financial development, banking access, and digital transaction activity. Data standardization was performed in Stata (v19.5) using the built-in function to create new variables with a mean of 0 and a standard deviation of 1. Cluster analysis was conducted using the k-means method in Statgraphics (v19), with silhouette scores computed in Python to determine the optimal number of clusters. Cluster analysis revealed four distinct country groups, demonstrating that similarities in banking ecosystem digitalization transcend income levels. Key convergence factors include ICT development, GovTech maturity, mobile banking adoption, and AI readiness. Some upper-middle-income countries exhibit digitalization patterns comparable to high-income economies, highlighting the role of strategic investment and policy, rather than income, as primary drivers of digital financial advancement.

Type of the article: Research Article

Abstract
This study examines the effect of Shariah-compliant fintech, financial inclusion, Shariah banking governance, and financial literacy on maintaining micro, small, and medium enterprises (MSMEs) in Indonesia. A standardized survey was administered to 157 owners and managers of MSMEs who are current clients of Shariah-compliant banking entities in West Java. Purposive sampling was used to obtain relevance since West Java is among Indonesia’s most dynamic MSME regions with robust Islamic banking penetration. Data were collected from June to September 2024 and analyzed using WarpPLS. This study demonstrates a profound ethical commitment regarding the protection of human subjects and the integrity of the research. The results indicate that financial literacy has the most significant direct impact on the sustainability of MSMEs (β = 0.847, p < 0.001), as it helps entrepreneurs make sound financial decisions and fortifies business endurance. Shariah banking fintech also has a direct significant but minor effect (β = 0.057, p = 0.008), while Shariah banking governance has a positive but also minor effect (β = 0.065, p = 0.005). Notably, financial literacy mediates the role of Shariah fintech and governance towards MSME sustainability in boosting their contribution. Nevertheless, it does not manage financial inclusion, which directly aids sustainability. These results underscore the important relationship between financial literacy and the effectiveness of Sharia-compliant financial services. The study proposes that targeted financial literacy campaigns, advanced fintech, and robust governance frameworks are needed to bolster the resilience of MSMEs and advance Indonesia’s economy.

Type of article: Research Article

Abstract
The post-COVID-19 era in Nigeria has witnessed several reforms and policies from the apex bank aimed at enhancing economic recovery. However, concerns have been raised about how these policies have impacted the stability of the banking sector. This study investigated the effect of monetary policies on banking sector stability in Nigeria in the post-COVID-19 era. The policy tools included monetary rate (CBN benchmark rate), nominal exchange rate, interest rates, and cash reserve ratio. Banks’ stability was proxied by an aggregate z-score of four broad banking soundness indicators (capital adequacy ratio, loan-to-deposit ratio, liquidity ratio, and profitability ratio). Monthly data from January 2021 to February 2024 on these variables were analyzed through the Autoregressive Distributed Lag approach to co-integration technique. Results revealed a significant one-period lagged error correction term (t-stat = –5.76, prob = 0.00) with a 45.2% adjustment speed from short-term to long-term. Further results showed that monetary rate (t-stat = 0.83; prob = 0.016) and nominal exchange rate (t-stat = 4.75; prob = 0.017) both directly and significantly affected the bank soundness index. However, interest rate (t-stat = –3.83; prob = 0.838) and cash reserve ratio (t-stat = –0.61; prob = 0.55) exhibited inverse and non-significant effects on the bank soundness index. The study concluded that monetary rate and nominal exchange rate are key determinants of banking sector stability in Nigeria since the post-COVID-19 era. Therefore, Nigeria’s apex bank needs to apply a more cautious approach to fixing monetary policy rates while focusing on boosting its foreign reserves to strengthen the local naira.