Issue #4 (Volume 21 2026)

Type of the article: Research Article

Abstract
Between 2005 and 2024, the digital divide separating former Soviet economies outside the EU from EU member states shrank from 44.8 to 2.4 points of a composite 0–100 index, and whether banking systems converted this catch-up into better performance is an open question. The paper evaluates the intermediation efficiency and productivity of banking in 24 transition economies during 2010–2024 and quantifies their relationship with digital infrastructure, paying special attention to Armenia, Kazakhstan, and Ukraine. Efficiency is measured with input-oriented window DEA on deposit funding, operating costs, lending, and profitability; productivity with Malmquist indices; and digital infrastructure with a principal-component index of internet, mobile, and broadband penetration. The estimation relies on two-way fixed effects with Driscoll-Kraay and bootstrap inference on 356 country-year observations. Productivity is flat overall with a Malmquist mean of 0.995, yet technological change moves from below unity through 2015 to above unity in 2016–2023, a regime shift robust to the output set and the translation constant. Within countries, the index is unrelated to efficiency levels, productivity growth, cost efficiency, and stability outcomes; the baseline cost-to-income and credit-risk associations dissolve under country-specific trends and differencing. Cumulative productivity reaches 1.162 in Kazakhstan and 1.106 in Armenia by 2024, while Ukraine climbs back to 0.856. Frontier renewal after 2016, rather than a measurable dividend from connectivity, is the substantive finding, and expectations of direct efficiency or stability gains from digital infrastructure should remain modest, particularly in postwar Ukraine.

Type of the article: Research Article

Abstract
The growing global demand for the integration of strong corporate governance in the banking industry is essential for enhancing financial performance. However, the interactive role of sustainable finance in strengthening governance mechanisms remains relatively underexplored. This study aims to examine whether adopting sustainable finance practices strengthens corporate governance mechanisms in the banking sector in ASEAN countries during the period 2018–2022. Utilizing the Fixed Effects Model, this study presents a notable finding. The results indicate that the interaction between management scores and green bonds has a positive and significant effect on Return on Assets, whereby a 5% increase in green bonds exposure raises ROA by 0.248, but exerts a negative effect on Return on Equity, with a decrease of 0.340 for every 1% increase. In contrast, the interaction between shareholder scores and green bonds has a negative and significant impact on ROA, with a decline of 0.223 for each 5% increase, while positively influencing ROE by 0.222 for every 1% increase. This study confirms that green bonds asymmetrically moderate the relationship between corporate governance and banking performance, in which management-oriented governance enhances asset efficiency but suppresses ROE, whereas shareholder-oriented governance reduces ROA while improving ROE. Conceptually, green bonds function as a balancing mechanism between corporate governance and banking performance, whereby managerial governance improves asset efficiency at the expense of equity returns, while shareholder-based governance enhances ROE with the trade-off of lower ROA.

Type of the article: Research Article

Abstract
ESG integration has become increasingly relevant to banking-sector performance, particularly in emerging markets where standardized external ESG ratings remain limited. This study aims to examine the association between ESG performance and the financial performance of selected Armenian commercial banks and to assess the relative role of the Environmental, Social, and Governance dimensions. The study uses a multi-method design based on 27 bank-year observations for Ardshinbank OJSC, Ameriabank CJSC, and ACBA Bank OJSC over 2017–2025, combining a disclosure-based ESG framework, descriptive analysis, Pearson correlation, Ordinary Least Squares regression, Multi-Criteria Decision Analysis, and evidence from 52 banking professionals. Overall ESG performance is positively associated with ROA (r = 0.64) and ROE (r = 0.60) and negatively associated with the Cost-to-Income ratio (r = −0.52). In the OLS analysis, Governance, Environmental, and Social dimensions show positive estimated relationships with ROA, with coefficients of 0.037 (p = 0.001), 0.023 (p = 0.012), and 0.019 (p = 0.018), respectively. Governance therefore demonstrates the strongest estimated association among the three dimensions. The MCDA framework assigns weights of 45% to Governance, 30% to Environmental, and 25% to Social factors, providing additional evidence of the relative importance of governance-related practices. The findings provide preliminary evidence of positive ESG–financial performance associations in the selected Armenian banks, while the results should be interpreted as exploratory and associational rather than causal due to the limited sample.

Type of the article: Research Article

Abstract
The increasing reliance on collaborative arrangements emphasizes the importance of strategic alliances for Regional Development Banks (BPD) in Indonesia. However, limited empirical evidence exists on how these alliances translate into improved performance, particularly through small and medium-sized enterprises (SME) commitment. Therefore, this study aimed to examine the role of strategic alliances in enhancing BPD performance, with a focus on the mediating effect of managers’ perceived SME commitment. Using a cross-sectional survey of 270 middle- to senior-level managers from 27 BPDs, the data were analyzed through structural equation modeling with Analysis of Moment Structures (AMOS). The results showed that the strategic alliance does not have a direct significant effect on bank performance. However, it demonstrated a positive and significant influence on managers’ perceived SME commitment, which in turn significantly enhanced performance. Managers’ perceived SME commitment mediated the relationship between strategic alliance and bank performance. In conclusion, the effectiveness of alliances depends more on relational mechanisms than on direct operational outcomes, thereby extending insights from the Resource-Based View and Dynamic Capabilities Theory. This study also provides practical implications for strengthening alliance strategies through enhanced commitment.

Type of the article: Research Article

Abstract
Under stress, information about counterparties can change willingness to interact faster than balance-sheet indicators register it, yet financial stability analysis still treats trust mainly as an aggregate variable. The study aims to develop a conceptual framework explaining how information signals update trust in specific relationships and thereby change the effective topology of the financial network. The framework synthesizes information asymmetry, financial intermediation, institutional, and financial network theories; the neural network of trust serves only as a functional analogy. Trust is defined as a directed, time-varying relational state variable, distinct from perceived default risk, with willingness to transact treated as its consequence. A generic mechanism updates trust from its previous level, information signals, and feedback from realized interactions. The framework separates trust, potential channel capacity, effective link strength, and realized flow, with effective link strength serving as the edge weight; its general form allows positive link strength at low trust where collateral, guarantees, or legal enforcement substitute for trust. A network matrix of effective link strengths connects bilateral dynamics to systemic outcomes through centrality, concentration, redundancy, and dependence on critical nodes. Four propositions follow: signals alter trust before funds move; trust updating reshapes link strength and network topology; systemic consequences depend on the network position of affected links; and, although each link responds monotonically to trust, trust concentrated in systemically important links may increase intermediation efficiency while reducing systemic resilience under particular network configurations. The framework shifts financial stability analysis from the level of trust to its distribution across relationships.

Type of the article: Research Article

Abstract
Banks invest in digital platforms expecting stronger loyalty. Yet, it remains unclear why some investments build durable relationships while others do not, because prior research conflates what customers do with how they experience it. This study tests whether co-created service experience mediates the relationship between customer-perceived digital transformation and customer loyalty among digital banking customers in Indonesia. Survey data were collected in 2025 from 360 customers of five banks in Medan, Indonesia, who had used mobile or internet banking for at least six months, ensuring direct experience with digital banking, and were analyzed using partial least squares structural equation modeling (PLS-SEM) with bootstrapping. All four hypotheses were supported: digital transformation was strongly associated with co-created service experience (β = 0.659, p < 0.001) and significantly associated with loyalty directly (β = 0.425, p < 0.001); co-created service experience was significantly associated with loyalty (β = 0.478, p < 0.001) and partially mediated the digital transformation–loyalty relationship (indirect effect β = 0.315, p < 0.001; VAF = 42.6%), with the model explaining 67.8% of the variance in loyalty. Digital transformation is thus associated with loyalty through two distinct routes, only one of which depends on customers feeling like genuine participants. Institutional trust was not measured directly in this study, so the link between this pattern and Indonesia's institutional trust conditions is interpretive and requires further testing. Because the sample is limited to a single city, findings apply to this market and should not be generalized to Indonesian banking as a whole.

Type of the article: Research Article

Abstract
The rapid expansion of the digital payment system has transformed financial inclusion in India; however, it has not eliminated persistent socioeconomic and spatial disparities in digital financial participation. The Unified Payments Interface (UPI) adoption has been marked by highly uneven adoption across socioeconomic groups, which limits its direct benefits. Using the World Bank’s Global Findex 2025 microdata, the machine learning-based causal forest model analyzes the heterogeneous effects of UPI readiness on individual-level digital payment adoption. The results show that UPI readiness has a positive average treatment effect of 0.161 on the digital payment index (0-1 scale). Substantial heterogeneity persists across urban–rural location, income, education, and gender, confirming entrenched digital divides. The most pronounced heterogeneity emerges along an inclusion-exclusion spectrum: individuals facing the greatest affordability and usability constraints experience treatment effects up to 3.7 times larger than the most digitally included groups. The findings point to the need to develop targeted digital inclusion policies for socially vulnerable population groups, aimed at strengthening their financial resilience and expanding their digital engagement. The study also provides novel empirical evidence on the effective use of machine learning methods to inform public finance policies aimed at fostering inclusive digital ecosystems.

Type of the article: Research Article

Abstract
This study examines the influence of cognitive styles (rationality and intuition) on decision-making behavior among senior banking executives, utilizing an integrated Cognitive-Experiential Self-Theory (CEST) and Theory of Planned Behavior (TPB) framework. Survey data from N = 220 middle/senior banking professionals (81 men, 139 women) in Tunisia were analyzed using Structural Equation Modelling (SEM) in AMOS. First-order confirmatory factor analysis confirmed robust construct validity and reliable fit. To rigorously evaluate structural dynamics across genders, a unified multi-group analysis was conducted using the identical structural model (estimating both Rationality and Intuition simultaneously across both groups). Bootstrapping analyses (5,000 resamples) revealed that both cognitive styles exert direct, residual effects on decision implementation speed, rejecting total mediation by behavioral intention. In the integrated model, rationality acts as a behavioral accelerator (β = 0.747, p < 0.001), whereas intuition functions as a risk-mitigating mechanism (β = –0.571, p = 0.003). Structural comparison demonstrates that male and female executives possess overlapping cognitive capacities to translate intentions into fast execution (β = 0.564 vs. β = 0.535, p < 0.001). These empirical findings show that operational execution in financial contexts relies on a dual-process balance between rational analysis and intuitive risk filtering rather than deterministic gender deficits.