Issue #1 (Volume 21 2026)

Type of the article: Research Article

Abstract
The study examines the impact of liquidity risk and operational risk on the financial stability in both commercial and Islamic banks in Jordan. The study utilizes secondary data covering a period of ten years, from 2012 to 2022, as it offers a holistic and uninterrupted period that includes the key regulatory, economic, and structural changes in Jordan’s banking sector. The study employs panel data analysis to assess these relationships. Liquidity risks are measured using the cash-to-asset ratio and the liabilities-to-deposit ratio, while operational risks are assessed through two indicators: the operational cost-to-income ratio and the operational cost-to-total-assets ratio. The findings reveal that the liabilities-to-deposit ratio, as represented by liquidity risk, and the operating cost-to-income ratio, as represented by operational risks, have significant negative impacts on the financial stability of conventional banks, which emphasizes the need for effective cost and liquidity management. In Islamic banks, financial stability improves significantly due to liquidity indicators: higher liabilities-to-deposit ratios and cash-to-asset ratios, highlighting how essential liquidity is. The operational risk indicators have no impact on Islamic banks. Moreover, control variables such as return on assets (ROA) positively influence stability in conventional and Islamic banks. However, the stability of conventional and Islamic banks faces negative influences from their size, which indicates that bigger banks could become exposed to operational risks and financial vulnerabilities. The research demonstrates that financial stability elements operate differently between conventional and Islamic banking systems. Financial institutions, together with governments, need to establish solutions to fill these gaps.

Type of the article: Research Article

Abstract
The balance between stability and profitability in banking systems has gained renewed urgency as rising interest rates, persistent inflation, and credit risks reshape the global financial landscape. Regulators, such as the IMF, ECB, and OECD, emphasize that while robust capital buffers are indispensable for resilience, excessive capitalization may constrain lending. In contrast, weak asset quality undermines returns regardless of capital strength. Against this backdrop, this article aims to explore how capital adequacy and asset quality jointly influence bank profitability. The analysis uses IMF Financial Soundness Indicators for 133 countries over 2010–2024 and applies two-way fixed-effects panel regressions with Driscoll-Kraay robust inference. The results reveal a consistently concave relationship: Tier 1 capital to assets is positively related to return on assets (ROA) with diminishing returns, though the turning point lies at an implausible 161.7%. In contrast, Tier 1 capital to risk-weighted assets shows an economically plausible peak around 26.3%, with gains tapering beyond that level. Within typical ranges (15-20% RWA), a one percentage point increase in capital is associated with a 0.06-0.03-point rise in ROA, but additional accumulation yields little benefit. Asset quality exerts a strong negative influence, with a 1-point increase in non-performing loans lowering ROA by 0.04-0.05 points, while liquidity remains statistically insignificant. These findings highlight that capital deepening contributes to profitability only up to moderate levels, and that poor asset quality can offset the benefits of stronger capital buffers, underscoring the need for integrated regulatory approaches to stability and performance.

Type of the article: Research Article

Abstract
The integration of artificial intelligence-driven predictive analytics has redefined financial management and decision-making across Gulf economies. This study compares the performance of artificial-intelligence-based and traditional predictive models using data from twenty financial institutions from six Gulf Cooperation Council countries. A quantitative cross-sectional design was adopted, and analysis of variance revealed statistically significant differences (p < 0.001) across all indicators. Predictive accuracy increased from 83.5 to 91.5 per cent (F = 4.23 × 10²⁹), operational efficiency from 12 to 19.5 per cent (F = 1.31 × 10³¹), risk-management effectiveness from 7.0 to 9.3 points (F = 2.69 × 10³⁰), and customer satisfaction from 6.5 to 8.5 points (F = 1.69 × 10³⁰). Regression analyses confirmed these outcomes: model type produced significant coefficients for predictive accuracy (β = 8.21, p < 0.001), operational efficiency (β = 7.46, p < 0.001), risk-management effectiveness (β = 2.29, p < 0.001), and customer satisfaction (β = 1.84, p < 0.001). The overall model explained 84 per cent (R² = 0.84) of the variation in institutional performance, confirming the strong predictive power of artificial-intelligence models. These results demonstrate that intelligent predictive systems significantly enhance accuracy, efficiency, and stakeholder value. The study concludes that transparent and ethically governed analytical frameworks are essential for sustainable financial competitiveness and responsible innovation in the Gulf region.

Type of the article: Research Article

Abstract
In bank-dependent economies, the structure and cost of corporate debt are crucial determinants of financial sustainability and investment decisions. Vietnam, with its underdeveloped capital market and dominance of bank lending, presents an ideal context to examine how banking market structure influences corporate financing. This paper explores the critical role of bank concentration in shaping the maturity structure and cost of debt among 520 listed Vietnamese firms during 2010–2024. The study utilizes financial data from FiinPro, including firm-level, bank-level, and macroeconomic indicators. A dynamic panel data model is estimated using the two-step system generalized method of moments (GMM) approach to address endogeneity concerns and ensure the robustness of results. The results highlight the pivotal role of bank concentration in shaping both the maturity structure and cost of corporate debt. The empirical findings reveal that higher bank concentration significantly increases the proportion of long-term debt. At the same time, firms reduce their reliance on short-term financing, indicating a shift toward more stable financial structures. Moreover, firms operating in more concentrated banking environments benefit from lower borrowing costs.

Acknowledgment
This research forms a component of Thi Hong Nhung Nguyen’s doctoral dissertation at Ho Chi Minh University of Banking, conducted under the supervision of Van Dan Dang.

Type of the article: Research Article

Abstract
Despite several reforms aimed at financial digitalization, such as the Cashless Policy (CP), Bank verification number (BVN), Linkage of National identification number (NIN) to bank accounts, and the Naira Redesign, a large proportion of Nigeria’s rural population remains digitally excluded. This study addresses a pressing gap of whether financial reforms are facilitating sustainable digital banking adoption or compounding existing barriers among rural users in South-west, Nigeria. A cross-sectional survey research design was employed, drawing data from 376 rural dwellers across six South-western states of Nigeria. A structured questionnaire measured rural dwellers’ engagement with digital financial services and the influence of key reforms. Using a cross-sectional survey, responses were analyzed through PLS-SEM, where findings revealed that the Cashless Policy (β = 0.192, p = 0.008) and National Identification Number linkage reform (β = 0.332, p = 0.000) significantly enhanced digital banking adoption, while the Bank Verification Number reform (β = 0.069, p = 0.396) and Naira Redesign (β = 0.038, p = 0.539) showed no significant effects. The study concludes that while some reforms have improved financial inclusion, Bank Verification Number and currency redesign policies require a systematic approach to better address rural realities and therefore recommends infrastructure development and user-focused reforms to strengthen rural digital financial participation.

Acknowledgment
The authors would like to acknowledge all respondents who took part in the survey.

Type of the article: Research Article

Abstract
This study examines the impact of market volatility on the financial performance sustainability in the banking sector and other sectors of the Saudi stock market (Tadawul). Given Saudi Arabia’s ongoing economic transformation under Vision 2030, financial stability remains a key priority, striving to sustain financial performance in the stock market sectors. Using panel data from various sectors of Saudi stock companies during 2019–2023, the study analyzes the effects of general market volatility and sector-specific volatility on financial performance indicators, such as ROE and net income volatility. A panel data regression approach, incorporating both fixed and random effects models, is employed to assess the relationships between volatility and financial performance. The results indicate that financial performance sustainability functions as a separate element because market volatility does not impact financial stability. Banks maintain their financial performance through their internal financial systems, which they use together with their debt management practices to navigate times of market instability. Financial leverage is a key factor that determines how financial performance is affected by financial volatility. Firms with high debt levels show high volatility in profits, indicating its importance in protecting against financial risks. The study reveals that firms should be effective in financial management systems and corporate governance to attain successful financial sustainability in their diversification of income streams. Additionally, policymakers and investors should optimize financial structures, as this approach strengthens market stability and supports Saudi Arabia in achieving its economic objectives.

Acknowledgment
The author extends appreciation to the Deanship of Postgraduate Studies and Scientific Research at Majmaah University for funding this research work through the project number (R-2026-49).

Type of the article: Research Article

Abstract
In recent years, rapid developments in information technology and the widespread use of the Internet have substantially altered the way organizations engage with customers. The banking industry is a prime example of this transformation, as it increasingly delivers services through electronic platforms. Amidst intensifying competition, banks are required to innovate to attract and retain customers. As a result, e-banking has become a fundamental driver of evolution within the financial sector. Therefore, this paper analyzes the impact of e-service quality, e-trust, and brand image on clients’ e-satisfaction and e-loyalty in Vietnam’s e-banking sector using the cognitive motivational relational theory. Using responses from 305 Vietnamese individuals experienced in e-banking, collected through Google Forms in May 2025 through the purposive sampling method, the study tested the proposed framework via partial least squares analysis. The survey was administered online, as this format offers an efficient and cost-effective solution for data collection. The findings revealed that e-service quality has a positive impact on e-satisfaction (β = 0.234, p = 0.006) and e-loyalty (β = 0.155, p = 0.010). Likewise, e-trust has a positive impact on e-satisfaction (β = 0.297, p < 0.000) and e-loyalty (β = 0.229, p < 0.000). Similarly, brand image has a positive impact on e-satisfaction (β = 0.158, p = 0.009) and e-loyalty (β = 0.194, p < 0.000). Besides, e-satisfaction has a positive impact on e-loyalty (β = 0.364, p < 0.000).

Type of the article: Research Article

Abstract
Climate-related risks have intensified the demand for transparency in the banking sector, particularly with respect to carbon-related information disclosed to stakeholders. In emerging economies, where climate disclosure remains largely voluntary, internal governance mechanisms are expected to play a decisive role in shaping reporting practices. The aim of this study is to examine the relationship between board governance effectiveness and carbon emission disclosure in the ASEAN banking sector. The object of the study is listed commercial banks operating in six ASEAN countries over the period 2014–2023. The analysis is based on panel data and employs fixed-effects and Tobit regression models to account for unobserved heterogeneity and the bounded nature of disclosure scores. The results indicate that board governance effectiveness is positively and statistically associated with carbon emission disclosure. Accordingly, the within R-squared value for the fixed-effects model is 23.5%, while the pseudo R-squared for the Tobit model is 55%, indicating strong explanatory power of both specifications. Economically, a one-point increase in the Board Effectiveness Score corresponds to an increase of 2.630 units in carbon emission disclosure in the fixed-effects model and 4.550 units in the Tobit specification, indicating economically meaningful improvements in disclosure intensity. In addition, bank size, age, profitability, and eco-innovation activity are found to be positively related to disclosure levels. The results remain robust across alternative specifications, including panel quantile regression, panel logit estimation, and two-step system generalized method of moments.

Type of the article: Research Article

Abstract
Foreign exchange markets have intrigued not only corporations engaged in export and import, but also individuals and other entities seeking to achieve decent risk-adjusted returns and protect themselves from future currency exchange rate exposure. Hence, researchers are drawn to examine the volatility of returns and identify diversification and hedging opportunities to mitigate country and financial risks of the five largest trading currencies with respect to the Indian currency, the rupee. The study used historical daily exchange rate data for the Indian currency with respect to American dollar, euro, British pound, Japanese yen, and Australian dollar, spanning from January 1, 2008 to December 31, 2025.
American dollar has the highest average daily return among the five currencies, followed closely by euro and pound. Pound exhibits the highest standard deviation, and its volatility suggests greater uncertainty for investors dealing in these transactions. High correlations between dollar-euro and euro-pound indicate that they are influenced by similar economic factors or market sentiments. Frequent structural breaks highlight the possibility for currency exchange rates to shift dramatically due to unforeseen events. This is a crucial insight for risk management, as it signals the need for dynamic hedging strategies that can adapt to sudden changes in market conditions. Investors and policymakers can leverage these findings to optimize currency portfolios and reduce financial risk, especially when seeking diversification benefits and long-term stability amidst global market shifts.

Type of the article: Research Article

Abstract
In the context of the Industrial Revolution 4.0 and 5.0, continuous advances in information technology have redefined electronic banking by enabling the emergence of fully digital banking services. Generation Z, characterized as digital natives due to their upbringing in a technology-saturated world and their adeptness with emerging digital technologies, represents a significant cohort in this shift. This study develops an extended Unified Theory of Acceptance and Use of Technology 3 (UTAUT3) framework by incorporating personal innovativeness to explain how various factors shape both behavioral intention and actual utilization of digital banking services among Generation Z in Indonesia. This research applied a quantitative methodology by surveying 892 Generation Z individuals who actively use digital banking services during the period from 1 April to 31 May 2025. The hypothesized model was evaluated using Partial Least Squares–Structural Equation Modelling (PLS-SEM). The analysis reveals that performance expectancy, facilitating conditions, habit, and personal innovativeness play a significant role in strengthening users’ intentions to adopt digital banking. Moreover, behavioral intention has a significant effect on actual usage behavior and serves as a mediating variable in the relationship between personal innovativeness and usage behavior. This highlights the central role of technological considerations and individual innovativeness in Generation Z’s digital banking adoption. This study enriches the technology adoption literature by empirically testing an augmented UTAUT3 model in the context of digital banking within a developing economy.

Acknowledgment
This study was financed by the Research and Community Service Program of the Faculty of Economics and Business at Diponegoro University, pursuant to Dean’s Decree No. 302/UN7.F2/HK/IV/2025.

Type of the article: Research Article

Abstract
Uncertainty is an important concern in banking risk management, as it can undermine the financial system’s shock absorption capacity and threaten overall banking stability. Utilizing a sample of 24 Vietnamese joint-stock commercial banks from 2012 to 2022 (Since 2023, several banks have undergone mergers and others have come under central bank control), this study analyzes and evaluates the impact of world uncertainty on credit risk in commercial banks. Additionally, the study analyzes the moderating effects of concentration and size on the relationship between world uncertainty and bank credit risk. By employing the Bayesian regression method and the Gibbs sampling algorithm, the research has obtained several noteworthy results. Firstly, the study finds that heightened world uncertainty exerts an increasing effect on bank credit risk. Secondly, the impact of world uncertainty tends to diminish when the size of banks increases or when the regulation of concentration within the system is strengthened. The results provide important insights for managers and policymakers, serving as a basis for management implications. These implications focus on managing bank size and system concentration to mitigate credit risk for Vietnamese commercial banks.

Type of the article: Research Article

Abstract
Green lending growth can support bank resilience and is therefore relevant to Kazakhstan’s pathway to carbon neutrality by 2060. The study created a panel of banking years (2015–2024) and assessed the relationships between banks’ regulatory compliance, digitalization, borrowers’ ESG performance, and green loan volumes using multivariate models. The research provides short-term forecasts using compressed ARIMAX and policy scenarios. Moreover, 20 purposively selected semi-structured interviews (commercial bank executives, SME owners, customers, and policy experts) and a national survey of 850 adult bank customers / SME owners led by the author were added. Across preferred specifications, regulatory eligibility and borrower ESG are consistently positive: policy support is associated with KZT 7-9 billion more green credit per bank year, and each one-point increase in borrower ESG is associated with KZT 0.34-0.38 billion higher volumes. Digitalization is positive but model-sensitive, strengthening within-bank variation; larger banks extend more green credit, consistent with capacity advantages. The results are interpreted through three stability channels: improved screening/asset quality, portfolio tilt toward taxonomy-aligned exposures, and funding access without making solvency claims. Scenario paths suggest aggregate green lending could reach KZT 80-96 billion by 2027 under aligned policy-ESG-digital conditions; under weak support, it may stagnate near KZT 49-55 billion. Findings motivate the development of a binding taxonomy with standardized disclosures, a national ESG scorecard registry, and inclusive digital rails to enhance SME and rural uptake.

Type of the article: Research Article

Abstract
Central bank digital currency (CBDC) programs have rapidly shifted from experimentation to policy-critical infrastructure decisions, yet countries show strikingly uneven progress from research to pilots and implementation. This study aims to identify and explain the key structural, macroeconomic, technological, and ecosystem-related factors that differentiate CBDC initiatives advancing to pilot or implementation stages from those remaining in early research or being discontinued across countries worldwide. Using 161 CBDC projects across 109 countries (as of December 2024) and 10 project-, public interest-, technology-, and macroeconomic indicators, we estimate a Support Vector Machines classifier with GridSearchCV (5-fold) tuning and interpret the results using Shapley Additive exPlanations explainability. The raw outcome distribution was strongly imbalanced (83.85% in the early/cancelled class), so ADASYN balancing was applied, producing 270 observations with equal class shares and an 85/15 train–test split (229/41). The optimized SVM (RBF; C = 10, gamma = 10) achieved 93.90% cross-validated accuracy and 0.88 accuracy on the test set, indicating strong predictive performance on unseen data. Test-set metrics show an informative error profile: for class 1 (advanced projects), recall = 1.00 and F1 = 0.89, while for class 0 (early/cancelled), precision = 1.00 with recall = 0.75 (macro/weighted F1 = 0.88), implying that the model identifies all advanced projects but may misclassify around one-quarter of early/cancelled cases. SHAP ranks the strongest drivers as use-case direction, inflation, crypto adoption ranking, CBDC-related research output, and international participation, with mixed/wholesale projects, higher inflation, stronger scientific attention, and greater international involvement generally increasing the likelihood of advancement.

Type of the article: Research Article

Abstract
Household savings are a fundamental driver of financial stability and economic growth, particularly in developing economies such as Indonesia. Given the presence of a dual banking system that includes both conventional and Islamic banks, understanding the saving behavior of Islamic bank customers is essential for improving financial inclusion and economic resilience. This study aims to empirically investigate the impact of service quality, customer satisfaction, customer value, customer loyalty, and income on household saving behavior in Indonesia’s Islamic banking sector. A structured questionnaire was administered to a sample of 260 Islamic bank customers, and the data were analyzed using Structural Equation Modelling (SEM). The findings reveal that customer loyalty is significantly influenced by service quality (β = 0.23), customer satisfaction (β = 0.41), and customer value (β = 0.15), explaining 31% of the variance in loyalty (R² = 0.31). Additionally, household savings are directly affected by service quality (β = 0.82), customer satisfaction (β = 0.16), customer value (β = 0.06), customer loyalty (β = 0.17), and income (β = 0.08), with the overall model accounting for 55% of the variance in saving behavior (R² = 0.55). These results underscore the critical role of banking service quality and customer-related factors in fostering saving habits within Islamic banks. The study offers actionable insights for policymakers and financial institutions aiming to enhance customer engagement and strengthen savings mobilization strategies in Islamic banking.

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

Type of the article: Research Article

Abstract
Money laundering poses serious risks for small open economies by weakening financial stability and reducing trust in the financial system. This paper investigates how central bank digital currencies (CBDCs) can enhance the enforcement of anti-money laundering (AML) policies in these economies. We develop a simple macroeconomic model to examine the trade-offs between stronger financial control and household welfare when digital enforcement tools are introduced. A dynamic model is constructed in which a representative household chooses consumption, labor, and foreign savings under a capital account that allows illicit transfers. The government enforces AML rules by increasing detection probability through CBDC infrastructure. The model compares scenarios with and without CBDCs to assess changes in behavior, illegal outflows, and welfare outcomes. The findings show that CBDCs can reduce money laundering by making transactions more transparent and harder to hide. As detection becomes more likely, the household’s incentive to move funds illegally declines, and the resulting loss of hidden income leads to slightly higher labor effort and lower consumption. The welfare effects depend on the balance between enforcement strength and households’ need for economic flexibility. Policymakers in small open economies can use CBDCs to improve the integrity of financial flows, especially when evasion risks are high. However, effective CBDC design must consider the trade-off between tighter control and households’ ability to manage their finances. This study provides one of the first theoretical frameworks showing how CBDCs reshape the interaction between financial transparency and household welfare in vulnerable economies.

Acknowledgments
We sincerely thank the Academic Editor for their guidance and support throughout the review process. We are also grateful to the anonymous referees for their constructive and thoughtful comments, which significantly improved the quality of this manuscript.

Type of the article: Research Article

Abstract
The adoption of Islamic banking services by Islamic academicians in Indonesia is crucial due to their influential role in promoting Shariah-compliant financial practices. This study aimed to examine the factors influencing their adoption behavior, with religious obligation as a central determinant. Using the Theory of Planned Behavior (TPB) as the foundation, the study analyzed the direct effects of religious obligation, relative advantage, access to service, trust, and social influence on adoption behavior, as well as their mediating effects when religious obligation serves as the foundation. Respondents were selected through purposive sampling for academicians with very strict eligibility criteria, where they must possess a formal bachelor’s degree in Islamic economics, Shariah, or Islamic finance, along with postgraduate education in a related discipline. The analysis was conducted in Indonesia in mid-2025 using Structural Equation Modeling with the Partial Least Squares approach based on 252 valid observations. The results revealed significant positive direct effects for religious obligation (β = 0.605), access to service (β = 0.201), and social influence (β = 0.188). Additionally, this study found a positive indirect relationship from religious obligation to the adoption of Islamic banking mediated by access to service (β = 0.096) and social influence (β = 0.090). This study concludes that campaigns targeting Islamic academicians must prioritize their sense of religious obligation as the core message. This should be reinforced with clear narratives about the ease of accessing Islamic banking services and compelling stories about the social respect and recognition they gain from peers when choosing Shariah-compliant financial practices.

Type of the article: Research Article

Abstract
This study investigates how Green Banking Initiatives influence bank environmental performance in India and determines the mediating effect of Green Finance Initiatives. The study is relevant as there is an increased need for financial institutions such as banks to facilitate the transition to a low-carbon economy. The study is based on the Resource-Based View, whereby Green Banking Initiatives are viewed as internal strategic resources and Green Finance Initiatives as dynamic capabilities that direct these resources towards achieving measurable bank environmental performance. The study used a primary data collection method through purposive sampling of 200 employees of public sector banks, including clerical staff, bank officers, senior officers, and bank managers, chosen due to the reliability of their positions in providing information on green banking and green finance activities based on practice. The analysis was conducted using Partial Least Squares Structural Equation Modeling (PLS-SEM). The findings indicate that Green Banking Initiatives significantly and positively influence both Green Finance Initiatives and Bank Environmental Performance. Additionally, banks’ Green Finance Initiatives were found to significantly contribute to improving banks’ environmental performance and partially mediate the relationship between Green Banking Initiatives and banks’ environmental performance. The study’s results indicate that internal sustainability practices increase the value of environmental concerns where it is aligned with strategic green financing activities. The findings can help understand how banks can contribute to national sustainability objectives and provide viable insights for policy formulation, capacity building programs, and strategic expansion of green lending.

Type of the article: Research Article

Abstract
Fraudulent behavior in banking services remains a critical challenge in Indonesia, especially amid rapid digitalization and increasing fintech adoption, while traditional models such as the Fraud Pentagon Theory (FPT) are limited in explaining new fraud drivers related to technological exposure and cultural dynamics. This study aims to detect fraudulent behavior in Indonesian banking services by modifying the FPT through the integration of prestige culture and fintech usage. It employed a survey approach targeting front-office employees of private national banks in Indonesia with at least two years of professional customer service experience. This sample was chosen because such employees are directly exposed to operational pressures, opportunities, and technological systems, making them highly relevant for detecting fraud risk factors. Data were collected using offline and online questionnaires and analyzed with Structural Equation Modeling (SEM) using WarpPLS. The results indicate that the seven factors of pressure (β = 0.916; p < .001), opportunity (β = 0.929; p < .001), rationalization (β = 0.847; p < .001), capability (β = 0.862; p < .001), control (β = 0.907; p < .001), fintech usage (β = 0.712; p < .001), and prestige culture (β = 0.837; p < .001) are significant in determining fraudulent activities, whereas the whistleblowing system (β = –0.312; p = .002) and fintech security usage (β = –0.298; p = .003) are moderators. Based on the findings, the conclusion is that pressure and opportunity are the most potent predictors of fraudulent activity, while whistleblowing and fintech security systems are important mechanisms for preventing such activity.

Type of the article: Research Article

Abstract
The connection between bad debts and bank profitability is vital for ensuring financial stability. However, while lending is a key source of banks’ revenue, rising bad debts can weaken their financial health, limit new credit issuance, and increase systemic risk. Therefore, understanding how bank-specific factors drive bad debts and affect profitability is crucial, particularly in distinguishing their impact on large and medium-sized banks. The purpose of this study is to assess the impact of bank-specific bad debts determinants on the profitability of South African banks. To achieve this objective, the study employs a Panel Autoregressive Distributed Lag (PARDL) model and an Error Correction Model (ECM) using bank data spanning the period from 2013 to 2023. The sample selection was informed by the data availability. The findings indicate that both the loan-to-deposit ratio and the capital adequacy ratio exert a positive impact on bank profitability, with large banks benefiting from stronger capital positions. The results further indicated that rising non-performing loan ratios correspond with decreased profitability in banks, particularly within medium-sized banks with limited risk absorption capacity. This research contributes to banking literature by offering a comparative perspective on the linkage between loans and both large and medium-sized banks in South Africa. The study suggests that, to mitigate potential defaults, medium-sized banks should exercise caution when issuing loans.

Type of the article: Research Article

Abstract
Bank profitability remains a central concern in emerging economies, particularly Vietnam, where commercial banks face traditional financial pressures and new strategic challenges. This study analyzes 20 Vietnamese banks during the period 2015–2024, integrating traditional bank-level indicators, macroeconomic variables, and innovation drivers (digital transformation and ESG). Profitability is measured by Return on Assets (ROA) and Return on Equity (ROE) from audited financial statements. We use a dynamic panel framework with unit root and cointegration tests, and estimate the model using the Arellano-Bond GMM method; the model selection and validity are supported by F, Hausman, and Breusch-Pagan tests. Robustness is assessed through pooled OLS, fixed effects, random effects, and feasible GLS.
The results show sustainable profitability: lagged ROE ≈ 0.42 (p < 0.001). Non-interest income (NII ≈ 0.21, p < 0.001), liquidity (LIQ ≈ 0.036, p = 0.002), and real GDP growth (GDP ≈ 0.020, p = 0.005) positively impact ROE. Innovation drivers – digital transformation (≈ 0.041, p = 0.004) and ESG efficiency (≈ 0.057, p = 0.011) – also contribute to improved profitability. Conversely, higher capital adequacy ratios (≈ −0.040, p = 0.004), deposits (≈ −0.016, p = 0.008), and operating expenses (≈ −0.021, p = 0.001) reduced ROE; inflation and credit risk indicators were negligible. Integrating traditional and strategic factors provides a more comprehensive view of bank performance and suggests policymakers should balance regulatory stability, innovation, and sustainability to support bank profitability.

Type of the article: Research Article

Abstract
Digital transformation in the banking sector increasingly determines the direction of financial intermediation, including infrastructure financing, which requires long-term commitment. This study analyzes the influence of digitalization, digital security, and banking product innovation on infrastructure financing. This study uses banking data from the Indonesia Stock Exchange. The data were sourced from published quarterly bank financial reports. The study uses 1,980 observations from the 2014–2024 period. The data are analyzed using panel data regression with a fixed-effects model. The results show that banking product innovation consistently has a significant positive impact on infrastructure financing. Innovation enables the development of new financing instruments, increases intermediation flexibility, and expands access to long-term funding sources – conversely, digitalization in banking yields contradictory findings. In the initial model, digitization had a positive effect on intermediation efficiency. However, the advanced model showed a significant negative impact, indicating a trade-off: short-term digital transaction efficiency can reduce banks' orientation towards long-term infrastructure project financing.

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.