Issue #3 (Volume 21 2026)

Type of the article: Research Article

Abstract
This study examines how the representation of women in corporate governance, particularly on boards of directors and audit committees, impacts the quality of bank earnings in Indonesia from 2001 to 2024. To evaluate the impact of women’s representation on bank earnings quality, the two-step Generalized Method of Moments (2SYS-GMM) estimation system was applied, measured through Discretionary Loan Loss Provisions (DLLP). The results show that the presence of women on the board of directors and in audit committee chair positions significantly improves earnings quality, whereas the presence of female independent directors and female audit committee members has no significant impact on earnings quality. However, the overall representation of women on these bodies has no significant effect. These results conclude that having women in leadership, particularly as chairs of the board of directors and audit committees, is crucial for improving the quality of bank earnings. Women in these roles have greater confidence to prioritize higher earnings quality. This study fills a gap in the current literature on the relationship between women’s representation in corporate governance and banking profit quality. Further, it offers valuable insights for banking practitioners, including policymakers, regulators, investors, management, and bank depositors.

Type of the article: Research Article

Abstract
Digital transformation of banking is widely expected to reshape competition, but it remains unclear whether it strengthens individual banks’ competitive positions, particularly in emerging markets. This study examines how digitalization relates to bank competitiveness, distinguishing the national digital environment from banks’ fee-based business models and taking Kazakhstan – a digital frontrunner with an unusually profitable banking sector – as the focal case. A two-layer, two-way fixed-effects design is used: a cross-country panel of up to 147 economies (2004–2025), combining IMF Financial Soundness Indicators with the United Nations E-Government Development Index, and a bank-level panel of Kazakhstan’s second-tier banks (2016–2025), in which a fee-oriented business model is proxied by commission income relative to assets. Across countries, the strong negative cross-sectional association between digital maturity and bank profitability – a country-level correlation of −0.45 – disappears once fixed country differences are absorbed, as a standardized coefficient of −0.43 turns to an insignificant +0.09, revealing a development gradient rather than a competitive effect. No robust within-country effect on profitability, margins, spreads, or cost efficiency survives. Within Kazakhstan, by contrast, a one-standard-deviation increase in commission intensity is associated with a 0.7 percentage-point wider interest spread and a 0.8 percentage-point higher net interest margin (both p < 0.05). This bank-level relationship holds when the dominant digital bank is excluded and is stable in magnitude under more conservative inference, though its statistical significance weakens, indicating that the competitive returns associated with a fee-based business model led in this market by digital, platform-based banks are concentrated within markets, across banks, rather than across national aggregates.

Type of the article: Research Article

Abstract
This study investigates whether competitive intensity and environmental complexity moderate the relationship between risk-taking and performance among rural banks in Central Java, Indonesia. The study was conducted in Central Java, Indonesia, during January-December 2024, using secondary data from the audited financial statements of 239 rural banks for the fiscal year ending December 31, 2024. Moderated regression models were estimated to examine the effects of credit risk (non-performing loan ratio), market risk (net interest margin), liquidity risk (loan-to-deposit ratio), and operational risk (operating expenses to operating income) on rural banks' performance (return on assets), and to test interaction effects with competitive intensity (Lerner index) and environmental complexity. The results indicate that net interest margin is positively associated with return on assets, whereas the operating expenses to operating income ratio is negatively associated; the non-performing loan ratio and loan-to-deposit ratio are not statistically significant. Lerner index and environmental complexity show no direct association with return on assets. However, the Lerner index strengthens the positive association between net interest margin and return on assets and exacerbates the negative association between operating expenses and operating income and return on assets. Environmental complexity weakens the positive association between net interest margin and return on assets. These findings suggest that market conditions and environmental complexity shape how risk indicators translate into rural bank performance in 2024, underscoring the importance of operational efficiency and adaptive risk management in competitive and complex environments.

Type of the article: Research Article

Abstract
Core capital efficiency plays a central role in safeguarding banking sector resilience in emerging economies characterized by high credit risk, regulatory constraints, and limited access to external capital. This paper aims to examine the bank-specific, macroeconomic, and institutional determinants of core capital efficiency in the banking sector of emerging economies, using a comparative analysis between Bangladesh and Nepal as representative markets. Considering a balanced panel dataset of 200 observations from 10 banks in each country, spanning from 2014 to 2023, this investigation adopts pooled OLS, fixed effects, random effects, and GLS estimators with Tier 1 capital ratio as a proxy for core capital efficiency. Empirical results show that bank size and profitability exert a strong and positive influence on core capital efficiency, while non-performing loan ratios and cost-to-income ratios significantly erode capital efficiency across models. In contrast, GDP growth and fintech adoption show no significant impact, reflecting the dominance of bank-specific factors over macroeconomic or technological influences. Overall, Bangladeshi banks demonstrate higher core capital efficiency despite elevated credit risk, reflecting stronger asset bases and regulatory adjustments. The findings highlight the need for targeted reforms focusing on asset quality and cost efficiency to enhance banking sector resilience in emerging markets.

Acknowledgment
The authors would like to express their heartfelt thanks to all participants in this study, especially the bankers who assisted in providing their banks' datasets for the analysis presented in this paper.