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.

Type of the article: Research Article

Abstract
This study aims to investigate the pooled effects of environmental, social, and governance (ESG) practices on banks’ financial performance (FP) using a random effects model of meta-analysis. In line with the PRISMA guidelines, 52 studies were identified as eligible out of 387 studies for this analysis. After applying the inclusion criteria, i.e., studies that have quantitatively reported the required measures like the correlation coefficient between ESG and FP, 16 studies were considered for meta-analysis with a combined total sample of 4,084 participants. The combined effect size was r = 0.10 (SE = 0.10, 95% CI: –0.11 to 0.31), reflecting a weak and statistically insignificant correlation, displaying no impact of ESG practices on the financial performance of banks from 2018 to 2025. Furthermore, the predicted interval was –1.38 to 1.59, which means that future research would provide very heterogeneous effect sizes. A heterogeneity analysis shows that there is wide variation among the studies (Q = 1213.82, p < 0.001, I² = 98.76%), indicating that differences in study characteristics may lead to differences in effect sizes. The trim and fill method provides no evidence for the existence of missing studies; however, publication bias is considered a possibility. The findings should be interpreted cautiously, given their high heterogeneity and the suspected source of bias. Despite their small effect size, inconsistencies across studies highlight the need for future research to investigate possible moderating factors. Practical implications emphasize that even if the generalizability of the findings is established, it cannot be without considering study-specific variables.

Type of the article: Research Article

Abstract
This study aims to examine how social customer relationship management influences customer lifetime value through the mediating and moderating roles of employee and customer engagement. The research focuses on Vietnam’s banking sector, including state-owned, private joint-stock, and foreign-owned banks. Data were collected through a structured survey targeting 282 bank employees from key departments such as customer service, marketing, and business development, who were selected based on their direct experience with social customer relationship management tools. Results from the Structural Equation Modeling analysis indicate that social customer relationship management significantly enhances customer acquisition (β = 0.162, p = 0.010), retention (β = 0.237, p = 0.000), and expansion (β = 0.251, p = 0.000). Employee engagement acts as both a mediator and moderator, with the strongest moderating effect observed on customer expansion (β = 0.135, p = 0.003). In contrast, customer engagement mediates retention and expansion but does not moderate the relationships. These findings highlight the critical role of employee engagement in maximizing the effectiveness of social customer relationship management strategies and emphasize the importance of engagement-focused initiatives for long-term success in the banking sector.

Type of the article: Research Article

Abstract
Sustainability reporting is a vital tool for businesses to present their activities and achievements in implementing sustainable development. It strengthens supervision and accountability to ensure information transparency in the banking industry. This study aims to examine the impact of the supervisory board on sustainability reporting in Vietnamese listed banks. Utilizing panel data from 2017 to 2024, the study assesses the period during which these banks brought about positive changes in economic integration. Secondary data from annual reports and financial statements of all listed banks in Vietnam are employed. The study employs quantitative methods to investigate the relationship between the supervisory board and sustainability reporting, using a feasible generalized least squares estimation technique to test the research hypotheses. The findings provide valuable insights for stakeholders to understand the supervisory board’s positive influence on sustainability reporting in the banking industry. Furthermore, the study supports practical implications for bank administrators in planning to enhance the monitoring board’s effectiveness in controlling information quality, promoting increased disclosure of sustainability information to foster stakeholder confidence, and attracting investment capital for economic growth in the banking sector. The study contributes to creating opportunities for community benefits to raise awareness of stakeholders about the environment and social responsibility for sustainable development in the context of global economic integration.

Type of the article: Research Article

Abstract
Effective change management is essential for navigating the constantly changing business environment. This study examines the impact of change management strategies on the performance of commercial banks in Nigeria, focusing on the moderating role of technology. The research employs a survey method, collecting data from 354 senior and management staff across 17 commercial banks. An exploratory factor analysis was conducted to validate the research instrument, followed by an ordered regression technique to estimate the specified model due to the rank-ordered nature of the criterion variable. The results reveal that reactive, proactive, and incremental changes are significantly associated with the performance of commercial banks in Nigeria. However, transitional change does not affect performance substantially, unless moderated by technology. The study highlights the critical role of technology in bridging the gap between transitional change and improved performance, underscoring its importance in the Nigerian banking sector. The findings suggest that Nigerian commercial banks should adopt proactive change strategies and continuously invest in relevant technology to manage transitional changes effectively and enhance performance. The study’s generalizability may be limited due to its focus on commercial banks, which constitute a small subset of the financial sector. Nonetheless, the large sample size enhances the robustness of the findings.

Type of the article: Research Article

Abstract
The growing focus of the IMF, World Bank, OECD, and European Commission on aligning finance with the Sustainable Development Goals (SDGs) raises the question of whether sustainability enhances banking sector profitability. This study aims to assess the impact of SDG performance on bank profitability, measured by return on assets (ROA), return on equity (ROE), and interest margin to gross income, controlling for GDP growth and inflation. The analysis uses an unbalanced panel of 143 countries over 2000–2024 (more than 2,100 country-year observations), applying fixed effects, random effects, and multilevel models with robust covariance estimators. The results show that the SDG Index Score has a weak and inconsistent effect on profitability. It is weakly positive for ROA (β = 0.125, p = 0.085) and marginally positive for interest margins (β = 0.151, p = 0.019), but becomes insignificant under robust specifications. For ROE, the SDG Index turns significantly negative in the random effects model (β = –0.119, p = 0.001), suggesting that higher SDG performance may be associated with lower equity returns. In contrast, the macroeconomic controls are robust across all models: GDP growth increases ROA (β = 0.107, p < 0.001) and ROE (β = 0.108, p < 0.001) but reduces interest margins (β = –0.061, p < 0.001), while inflation consistently raises profitability across all indicators. Regional patterns further indicate lower profitability in OECD and Western Europe and higher interest margins in East and South Asia, Latin America, and MENA.

Type of the article: Research Article

Abstract
Institutional quality is a cornerstone for developing a financial system at the country level, including financial soundness in the banking sector. Hence, this study examines the impact of institutional quality on banks’ default risk in a dual banking system, with an in-depth analysis of the differential influence on Islamic and conventional banks. Applying the Two-Step System Generalized Method of Moments (2-Step SGMM), the study comprises 2,232 bank-year observations from 248 banks across eight countries, spanning the period from 2013 to 2021, which utilize dual banking systems. The findings of the study document that the aggregate score of institutional quality and its elements reduces banks’ default risk in all observed countries, comprising Saudi Arabia, Bangladesh, the United Arab Emirates (UAE), Kuwait, Bahrain, Malaysia, Indonesia, and Pakistan. Moreover, Islamic banks are better than conventional banks in terms of their marginal effect on default risk when there is a change in institutional quality. Islamic banks are also found to have less default risk than conventional banks when higher institutional quality is present in the elements of control of corruption and voice and accountability. The results emphasize the pivotal role of institutional quality, as the level of the banking system’s stability depends on the development of institutional quality.

Type of the article: Research Article

Abstract
This study aimed to examine employee fraud triggered by psychological and cultural factors, including Hofstede’s collectivist culture, as well as dark triad personality traits (machiavellianism, narcissism, and psychopathy), which were considered potential triggers of employee fraud. The research was a quantitative study, based on data collected through a survey of respondents in 127 rural banks in Bali. Using a purposive sampling method, the heads of the funds, credit, treasury, and accounting departments were selected as research respondents, totaling 386 individuals. The survey was conducted from January to February 2024. The Partial Least Squares analysis technique was used to evaluate the hypotheses. The findings suggested that collectivism and dark triad personality traits (machiavellianism, narcissism, and psychopathy) had a positive effect on employee fraud in the banking sector. It was considered very important for banking institutions to enforce restrictions on practices that foster a collectivist culture, as such a culture could contribute to the proliferation of fraudulent activities by employees. However, the predictive value of the model needed to be improved by introducing moderating variables, considering the numerous factors that could influence fraudulent behavior.

Type of the article: Research Article

Abstract
Financial firms are emerging as key drivers of sustainable business, shaping development through the entities they choose to finance. The ownership structures and governance mechanisms of these firms can shape sustainability efforts, potentially affecting financial stability through risks and costs of implementation. This study aims to examine the impact of ESG initiatives on the financial stability of Korean financial firms and understand how ownership concentration moderates this relationship. Utilizing a fixed-effects regression model, the study investigates 537 firm-year observations across 53 Korean financial sector firms, including banks, insurance companies, securities firms, and diversified financial services firms, from 2012 to 2023. The analysis reveals that for banks, environmental sustainability initiatives are positively associated with financial stability (coefficient = 0.0017; t = 1.84), while social responsibility initiatives have a negative association (coefficient = –0.0018; t = –2.00). For insurance firms, overall sustainability efforts show a negative relationship with financial stability (coefficient = –0.0061; t = –1.72), driven mainly by the governance dimension (coefficient = –0.0074; t = –2.06). Additionally, in the case of banks, higher ownership concentration diminishes the positive impact of environmental sustainability on financial stability (coefficient = –0.0056; t = –1.90). Moreover, ownership concentration acts as a double-edged sword where its moderating impact varies depending on whether the financial firm is a high or low ESG performer. These findings highlight the importance of firm-specific dynamics in aligning with institutional and societal expectations of ESG while navigating the complexities of ownership concentration as a pathway for financial firms to maintain financial stability.

Acknowledgment
The authors would like to express their sincere appreciation to the Korea Institute of Corporate Governance and Sustainability (KCGS) for generously providing the ESG ratings data for financial firms in South Korea. Their valuable support made these analyses possible.

Type of the article: Research Article

Abstract
This study examines the effect of disclosure of Key Audit Matters (KAM) on accounting and market performance of Jordanian banks listed on the Amman Stock Exchange over the period 2017–2024. The research is relevant because disclosure of audits is at the heart of winning the confidence of investors and corporate governance. The 13-bank panel data are used over the period of eight years, and fixed effects regression with robust clustered standard errors is employed. Two regressions are estimated: accounting performance in the form of return on assets (ROA) and market valuation in the form of Tobin’s Q. These results are suggestive of the fact that more disclosure of KAM has been negatively and significantly connected with ROA (β = –0.176, p < 0.05), implying short-term profitability constraints, but positively and significantly connected with Tobin’s Q (β = 0.285, p < 0.05), implying greater investor optimism and reduced information asymmetry. These results suggest that although KAM disclosures are not expected to directly improve profitability, they enhance market valuation through enhanced disclosure and governance. The results have policy implications for improving disclosure standards to enhance transparency and stability, and for banks to further work on strengthening the independence and qualifications of audit committees to drive performance improvements.

Acknowledgment
The authors would like to thank Middle East University, Amman, Jordan, for the full funding of this research.

Type of the article: Research Article

Abstract
The instability or failure of financial institutions frequently triggers global financial crises, as exemplified by the 2008 global financial crisis that originated from subprime mortgage defaults in the United States. This study examines the impact of liquidity risk, credit risk, and capital adequacy on the financial stability of Islamic banks in Indonesia and Malaysia and explores the moderating effect of operational efficiency on this relationship. This study utilizes data from 16 Islamic commercial banks in Indonesia and 13 Islamic commercial banks in Malaysia, spanning the period from 2018 to 2024. Data were collected from annual reports and analyzed using panel data regression and System-GMM to address potential endogeneity. The results of panel data analysis indicate that banks with lower liquidity risk and credit risk tend to perform better in terms of stability. Additionally, higher capital adequacy is associated with higher stability. Initially, it was found that efficiency only moderates the effects of liquidity risk and credit risk on bank stability. However, further analysis using System-GMM revealed that efficiency also moderates the relationship between credit risk, liquidity risk, and capital adequacy on bank stability. This outcome confirms that the endogeneity issue has been successfully addressed using Sys-GMM analysis.

Acknowledgment
The authors would like to thank the LPPM of Universitas Pembangunan Nasional Veteran Jakarta for supporting this research. We also thank Dr. Amrie Firmansyah, SE, MM, M.Ak, ME, MA, MH, CSRS, CSRA, who guided and provided advice for this research. 

Type of the article: Research Article

Abstract
This study, grounded in agency theory, stewardship theory, and resource dependency theory, examines the influence of corporate governance on firm value within the banking sector of Bangladesh. This research analyzes annual panel data from 22 commercial banks spanning the period from 2014 to 2023, investigating the impact of governance structures, specifically board composition, ownership structure, and audit committee characteristics, on firm value using Tobin’s Q, market capitalization, and the market-to-book value of equity measures. The Feasible Generalized Least Squares (FGLS) method is utilized for dynamic panel data estimation to address cross-sectional dependence, heteroscedasticity, and autocorrelation, with robustness evaluated via the Panel-Corrected Standard Errors (PCSE) approach. Overall findings reveal that increased managerial ownership, gender-diverse boards, and an independent audit committee director correlate positively with firm value. Specifically, institutional ownership exhibits a positive correlation with Tobin’s Q and the market-to-book value of equity, whereas foreign ownership and larger boards positively affect Tobin’s Q and market capitalization. In contrast, board size adversely impacts the market-to-book value of equity, while frequent board meetings correlate with a diminished Tobin’s Q. The audit committee size and meeting frequency have no statistically significant effect. These findings provide significant insights for regulators and policymakers, highlighting the necessity of inclusive governance, strategic ownership alignment, and independent oversight in enhancing the value of banks in emerging economies, such as Bangladesh.

Acknowledgment
Shaikh Masrick Hasan gratefully acknowledges the research grant provided by Jagannath University, Bangladesh, in the financial year 2024–2025, which made this study possible.