Issue #2 (Volume 21 2026)

Type of the article: Research Article

Abstract
This study examines the impact of exchange rate fluctuations on banking and financial service indices in India. To validate this, five exchange rates are considered based on their relative share in the total foreign remittance inflows to India, viz., Arabian Dirham (AED/INR), Great Britain Pound (GBP/INR), Saudi Riyal (SAR/INR), Singapore Dollar (SGD/INR), and US Dollar (USD/INR). The study includes daily data of a decade (2015–2025), and employs various econometric techniques such as ADF test, Johansen cointegration, Vector Error Correction Model (VECM), and Impulse Response Function (IRF) for the analysis. The Johansen cointegration test indicates a long-run relationship between exchange rates and both the sectoral indices, as the probabilities are less than 0.05. The VECM analysis for both the Nifty Bank and Nifty FinServ identified USD/INR (2,308.66; 2,257.58) and SAR/INR (373.25; 360.73) as the dominant long-term drivers, whereas AED/INR (–2,671.406; –2,608.011) acts as a persistent structural anchor with a negative influence. In the short run, shocks in USD/INR and SGD/INR generate immediate positive effects, whereas volatility in AED/INR and SAR/INR leads to temporary negative deviations before the system converges back to the equilibrium. The impulse response function indicates that exchange rate shocks have temporary effects on both the indices, which dissipate quickly, reflecting rapid market adjustment and overall efficiency. The findings of this study will help policymakers to improve the exchange rate risk monitoring system and executives in banks and financial institutions to formulate their hedging strategies. For investors and portfolio managers, the findings suggest that currency movements can serve as early indicators of market fluctuations, thereby supporting more informed investment decisions.

Type of the article: Research Article

Abstract
Sustaining employee engagement has become essential for the operational efficiency and service quality of Indian public sector banks, particularly as Generation Y employees increasingly constitute a major share of the workforce. This study aims to empirically validate a gender-moderated structural model of employee engagement among Generation Y employees in Indian public sector banks. Data were collected from 223 Generation Y employees across public-sector banks in India, using a combination of a paper-based questionnaire and an online Google Forms survey. Variance-based structural equation modelling was used to assess the measurement and structural models, while multi-group analysis explored gender-specific differences in the hypothesized paths. Six significant antecedents of employee engagement were identified: Corporate Social Responsibility, Dispositional Characteristics, Psychological Availability, Psychological Safety, Perceived Supervisor Support and Transformational Leadership, and Social and Interpersonal Relationships. Engagement positively affected Organizational Citizenship Behavior and Task Performance, and mediated all antecedent–outcome relationships. Gender-based differences emerged, with Corporate Social Responsibility and Dispositional Characteristics more influential for women, while Fit Perceptions and Distributive Justice showed stronger effects for men. The study contributes to the banking literature by offering a multidimensional, empirically tested engagement model and demonstrating gender’s moderating role.

Type of the article: Research Article

Abstract
Fraud remains a pervasive challenge undermining financial integrity and stability in the banking sector, particularly in developing economies. This study investigates the determinants of fraud detection effectiveness in Indonesian Regional Development Banks (RDBs), focusing on auditor competency, internal control effectiveness, risk-based internal audit, risk management processes, and information technology utilization. The study population consisted of internal auditors, managers, and audit committee members at Indonesian Regional Development Banks. Using a quantitative approach with 204 survey responses analyzed through Partial Least Squares-Structural Equation Modeling (PLS-SEM), the results show that all five factors have a significant positive effect on fraud detection (R2 = 0.554). Risk-based internal audit demonstrates the strongest influence (sig 0.000 < 0.05), followed by risk management processes (sig 0.003 < 0.05), information technology (sig 0.002 < 0.05), internal control effectiveness (sig 0.001 < 0.05), and auditor competency (sig 0.017 < 0.05). The results reveal that all five factors significantly enhance auditors’ ability to detect fraud. These findings indicate that governance mechanisms and digital capabilities jointly enhance fraud detection effectiveness in RDBs.

Acknowledgment
The authors would like to thank the Universitas Sumatera Utara, Indonesia, especially the Research Institute, for its support and the Ministry of Education and Research through the Directorate of Research, Technology, and Community Service program for providing intellectual assistance and funding for this project in the PMDSU grant (number: 83/UN5.4.10.K/PT.01.03/KP-DRTPM/2025).

Type of the article: Research Article

Abstract
Central bank independence is widely recognized as a precondition for launching inflation targeting, but there is no empirical support for this. While actual independence of monetary institutions is key for the effective implementation of this monetary regime, formal reforms have been implemented extremely unevenly both over time and across countries. Legal origins may affect different institutional paths of central bank independence strengthening during the adoption of inflation targeting across countries. Applying a t-test, panel regression, and difference-in-difference based event-study analysis, we show a strong statistically significant distance between levels of central bank independence across Common Law and Civil Law countries with inflation targeting. Civil Law countries perform with higher central bank independence; they are more likely to strengthen it before inflation targeting launch and continue to reform the central bank’s legislation toward greater autonomy after the introduction of this monetary regime. These results confirm that Legal origins matter for central bank independence. More formally oriented Civil Law coexists with relevant legislation changes. While less formally oriented Common Law may not require changes in legislation to implement a monetary regime grounded on central bank independence, in essence. Such results help explain weak empirical arguments for strengthening central bank independence as a precondition for inflation targeting, given the structural heterogeneity of countries determined by legal tradition.

Type of the article: Research Article

Abstract
Bank profitability, as measured by return on equity (ROE), may arise from different combinations of operating efficiency, risk costs, and capital intensity, making headline profitability comparisons potentially misleading. Understanding the sources of cross-bank profitability differences is therefore important for performance evaluation and supervisory interpretation.
The purpose of this study is to assess how accounting-based performance components explain cross-bank variation in ROE among Armenian banks using year-end 2023 IFRS data and a Shapley variance decomposition applied to these components. The empirical analysis uses published IFRS financial statements for ten banks representing approximately 75% of total sector assets. ROE is mapped into cost efficiency, leverage, income margins, and provisioning using an accounting identity, and a Shapley variance decomposition is applied to attribute cross-bank variation in pre-tax ROE, excluding tax effects from variance attribution.
The results indicate that cost efficiency accounts for 49.6% of cross-bank pre-tax ROE variation in 2023, followed by leverage at 22.6% and provisioning at 14.8%, while income-related components jointly account for the remaining 13%. Importantly, these variance shares reflect both the role of each component in the accounting transmission from income to profitability and the magnitude of its cross-sectional variation across banks. These results describe the structure of cross-bank profitability differences in the Armenian banking sector in 2023 and support transparent peer comparison and consistent supervisory interpretation of bank profitability. All variance shares are reported for pre-tax ROE to improve comparability by abstracting from institution-specific tax effects.

Type of the article: Research Article

Abstract
This study examines the post-decision announcements of the National Bank of Ukraine (NBU) during the pre-war and wartime periods from 2018 to 2025, focusing on changes in communication complexity and their subsequent impact on the anchoring of household inflation expectations. Based on various readability measures, we document a significant increase in the linguistic complexity of NBU communications during the war. For example, the Flesch-Kincaid Grade Level index indicates that the number of years of schooling required to understand NBU announcements increased by approximately one additional year. Despite these changes, we find no statistically significant effect on the gap between household inflation expectations and the NBU’s inflation forecast. At the same time, the expectations gap narrowed substantially during the war period, likely due to the convergence of households and NBU predictions under shock conditions. Moreover, the gap continued to narrow as inflation pressures eased. Our econometric analysis relies on dynamic specifications with robust inference to account for persistence, serial correlation, and structural breaks associated with the full-scale invasion. The findings contribute to the literature on central bank communication by providing rare wartime evidence from a small open economy, highlighting the limits of textual complexity as a policy tool for shaping household expectations.

Type of the article: Research Article

Abstract
The study analyzes the role of the Funding Gap (FGAP) as a dynamic structural liquidity indicator that influences bank financial stability in emerging markets, particularly amid heightened post-COVID-19 financial volatility. It aims to forecast banking stability by integrating advanced econometric and machine-learning techniques using a balanced panel dataset of 63 commercial banks from six ASEAN countries over the period 2010–2023. The methodological framework combines Ridge regression for variable selection, Particle Swarm Optimization (PSO) for hyperparameter tuning, and SHapley Additive exPlanations (SHAP) for interpretability within a Gradient Boosting model. The PSO-optimized specification achieves an R2 of 92.2%, substantially outperforming traditional fixed-effects and random-effects regressions. Empirical results indicate that persistent negative FGAP values significantly reduce Z-scores, confirming that structural liquidity imbalances constitute a key transmission channel from funding stress to systemic fragility. The analysis further reveals the moderating role of macroeconomic shocks, particularly inflation and the COVID-19 pandemic, in amplifying liquidity-induced instability. The proposed framework functions as an operational early warning system that enhances forecasting accuracy, model interpretability, and regulatory transparency, while repositioning FGAP as a forward-looking liquidity metric and offering both theoretical and practical contributions to financial risk management and supervisory practices in emerging economies.

Type of the article: Research Article

Abstract
One of the fundamental functions of commercial banks is providing credit to the public; however, with advancements in digital technology, this function is increasingly being performed by fintech lending companies as well. Accordingly, this study seeks to examine whether the growth of fintech credit in Indonesia acts as a substitute for or a complement to credit extended by commercial banks. The analysis utilizes monthly data from January 2018 to February 2023 and employs the Autoregressive Distributed Lag (ARDL) model to capture both short-run and long-run relationships between fintech lending and bank credit growth. The results indicate that the expansion of fintech credit exerts a positive and significant effect on the growth of bank lending, showing that fintech financing functions as a complement rather than a substitute. An increase in fintech credit is associated with an expansion of bank credit, implying that fintech lending enhances overall financial intermediation by reaching underserved segments and supporting credit distribution through formal banking channels. These findings suggest that fintech development does not crowd out bank lending but instead strengthens Indonesia’s credit ecosystem. The findings offer important guidance for regulators and other stakeholders in formulating suitable policies to respond to the rapid advancement of fintech services. With a balanced regulatory framework, effective oversight, constructive collaboration, and adequate digital infrastructure, Indonesia’s financial ecosystem has the potential for inclusive, efficient, and sustainable financial development.

Type of the article: Research Article

Abstract
This paper investigates the determinants of bank profitability in Oman. It covers two broad categories of traditional factors that determine bank profitability, namely bank-specific variables: capital adequacy, credit risk, liquidity risk, and operational efficiency; and macroeconomic variables: economic growth, inflation, industry concentration, credit growth, and interest rates. Due to the nature and small size of the Omani economy, the industry-specific factors are clubbed with macroeconomic factors. The findings show that the p-value (0.00) is well below the 5% significance level for both ROE and ROA proxies, leading to the acceptance of the null hypothesis of no co-integration. Moreover, Fisher’s chi-squared test statistics are 145.742 for ROE and 150.224 for ROA, strengthening the absence of a long-term relationship between both bank-specific and macroeconomic variables. Co-integration vectors with Fully Modified OLS show that CPI (Inflation) does not significantly influence ROE (p = 0.280), indicating that explanatory variables have no significant impact on ROE at 5% significance level. Similarly, in estimating ROA, neither CPI (p = 0.146) nor GDP (p = 0.435) reflects a significant effect, suggesting that these macroeconomic variables do not have a co-integrating impact on profitability metrics. The study indicates that bank profitability in Oman is sensitive to both internal and external factors. However, the degree to which each determinant affects a bank’s profitability in Oman varies from that observed in international studies. The findings have important implications for decision-makers in the banking sector when developing appropriate strategies, considering the sensitivity of each factor indicated in our study to bank profitability.

Acknowledgments
We express our gratitude to the management, staff, and students at the College of Banking and Financial Studies for their valuable support.

Type of the article: Research Article

Abstract
The article provides a comprehensive empirical assessment of the legal and operational regimes of digital asset circulation and their real impact on the financial market. To quantitatively measure the degree of state control, a composite Crypto Regulation Stringency Index (CRSI) was applied, constructed based on the OECD-JRC methodology. The index integrates 16 parameters across five fundamental areas (legal status, anti-money laundering, taxation, licensing, and consumer protection) for 61 countries (jurisdictions) as of 2025. The developed tool demonstrated high internal consistency and factor structure reliability (Cronbach’s α = 0.955).
To determine the market consequences of legal regulation, the index values were compared with the Chainalysis 2025 Global Crypto Adoption Index. The direct unconditional correlation between the stringency of rules and the scale of digital asset usage proved to be weak. However, a multivariate regression analysis conditional on a set of macroeconomic and institutional covariates (income level, digital infrastructure development, financial freedom, quality of the rule of law, and the specifics of the MiCA regulation) revealed a robust and statistically significant positive relationship. The reversal of the effect is consistent with a Simpson-type compositional effect: within groups of countries with comparable levels of economic development, clear and strict regulatory rules stimulate market activity. The findings extend the literature on comparative financial law and demonstrate that state control does not suppress the crypto-economy but rather serves as its stable institutional foundation.

Type of the article: Research Article

Abstract
Systemic risk has emerged as a significant concern for financial stability, particularly in emerging markets that are susceptible to global financial disruptions. This paper examines the transmission channels of systemic risk within the Moroccan banking sector during significant crises, including the Subprime crisis, the European sovereign debt crisis, and the COVID-19 crisis. This study aims to characterize the Moroccan banking network, determine the key contributors to systemic risk, and analyze the mechanisms through which amplification loops exacerbate systemic risk under stressed market conditions. The complex dynamics of systemic risk transmission are captured by the ∆Conditional Value at Risk approach, which is represented as a directed weighted network, with topology indicators capturing the network position of financial institutions. The results indicate a pronounced core–periphery network, in which Attijariwafa Bank (AWB), Bank of Africa (BOA), and Banque Centrale Populaire (BCP) consistently form significant triangular feedback loops that amplify systemic risk across all examined periods. In-strength and out-strength centrality measures confirm their dominant positions as primary transmitters and receivers of systemic risk. In contrast, peripheral institutions play a comparatively less pronounced role within the network. Overall, the results point to a marked structural concentration of systemic risk within Morocco’s banking network and provide important implications for regulators and policymakers aiming to strengthen macroprudential oversight and safeguard financial stability.

Type of the article: Research Article

Abstract
Islamic finance plays a crucial role in promoting inclusive and sustainable economic growth, particularly in emerging economies such as Indonesia. Despite the rapid expansion of Islamic banking, participation from non-Muslim consumers remains relatively low, revealing a gap in understanding the motivational factors that drive their engagement. This study aims to analyze how the Islamic Product Brand Image influences Islamic Financial Inclusion among non-Muslim consumers through rational, emotional, and spiritual motivational factors. A quantitative research approach was employed using Partial Least Squares Structural Equation Modeling (PLS-SEM) with data from 384 non-Muslim respondents who intend to use Islamic banking products in Indonesia. The analysis included tests of validity, reliability, and hypothesis using bootstrapping procedures. The results show that Islamic Product Brand Image does not directly affect Islamic Financial Inclusion (β = –0.187, p = 0.258), but has a significant indirect effect through Product Features (β = 0.164, p = 0.045) and Religiosity (β = 0.200, p = 0.031). Sustainable Finance, representing emotional motivation, was found to be insignificant (β = 0.093, p = 0.348). These findings indicate that rational and spiritual motivations are stronger determinants than emotional ones in influencing non-Muslim consumers’ inclusion in Islamic banking. Theoretically, this study contributes to understanding cross-religious financial inclusion by integrating multidimensional motivational constructs. Practically, it suggests that Islamic banks should emphasize product innovation, transparency, and ethical trust-building to enhance inclusivity across faith boundaries.

Type of the article: Research Article

Abstract
Whether digital transformation in the public sector and in financial services jointly contributes to banking stability – or whether the two strands proceed along parallel trajectories – remains an open empirical question for post-socialist economies undergoing both reforms simultaneously. This study addresses the question in three components. First, a cross-country mediation analysis covers up to 130 economies over 2018–2024 (853 country-year observations), drawing on the World Bank GovTech Maturity Index, the IMF Financial Access Survey, and the IMF Financial Soundness Indicators, with panel OLS, country-clustered standard errors, and bootstrap mediation tests. Second, the results are decomposed via fixed-effect deviations for three post-Soviet economies from distinct EBRD regions: Ukraine, Armenia, and Kazakhstan. Pre-shock GovTech maturity is positively associated with digital banking adoption (β = +2.91, p = 0.017); sub-pillars differ in channel: core government systems for transaction intensity, public service delivery for account ownership. Bootstrap mediation tests do not support the indirect path through digital banking adoption (six specifications, lowest p = 0.132). GovTech maturity instead shows a substantial direct association with the non-performing-loan ratio – a 13-percentage-point reduction per unit increase in GTMI (p = 0.037) – plausibly operating through institutional infrastructure such as property registries, e-courts, and tax-credit information systems. The two strands are linked but not chained: GovTech is associated with digital banking adoption, yet the route to lower non-performing loans runs through institutional infrastructure. Country-level decomposition reveals heterogeneous GTMI trajectories and identifies reform priorities across public service delivery and core government systems.

Acknowledgment
This article was prepared based on the results of a study funded by the Ministry of Education and Science of Ukraine entitled “GovTech for Ukraine: A Digital, Secure, Transparent, and Equitable State in Times of War and Post-War Reconstruction” (registration number: 0126U000544).

Type of the article: Research Article

Abstract
The rapid expansion of cross-border payments driven by digital banking and e-commerce has increased banks’ exposure to payment fraud, intensifying governance challenges in emerging-market financial systems. This study investigates the impact of corporate governance structures on cross-border payment fraud in Vietnamese commercial banks. The study applies Feasible Generalized Least Squares (FGLS) estimation to an unbalanced panel of Vietnamese listed banks over the period 2015–2024, examining a constructed bank-level cross-border payment fraud index in relation to key board-level governance characteristics. The empirical results show that board independence (β = −0.0009, p < 0.01), board meeting frequency (β = −0.0008, p < 0.01), directors’ financial or technological expertise (β = −0.0014, p < 0.01), and female board representation (β = −0.0006, p < 0.05) are significantly associated with lower fraud exposure, indicating that stronger monitoring intensity and governance-related expertise reduce fraud vulnerability. In contrast, CEO duality increases fraud risk (β = 0.0025, p < 0.01), suggesting that concentrated leadership weakens oversight effectiveness. These findings confirm that effective board independence, active monitoring, and governance expertise play a critical role in mitigating cross-border payment fraud in emerging-market banking systems.

Type of the article: Research Article

Abstract
The rapid expansion of digital banking services has increased concerns regarding excessive and uncontrolled user behavior, particularly impulsive and compulsive usage patterns. This study aims to examine the effect of perceived ease of use (PEU) and perceived usefulness (PU) on compulsive digital banking behavior, with impulsive usage (IU) as a mediating mechanism. A quantitative approach was employed using a survey of 348 active users of digital banking applications, specifically Bank Jago and Allo Bank, selected through purposive sampling based on their experience in digital financial transactions. Data were collected online between April and June 2025 to reflect current digital banking behavior. The results show that PEU (β = 0.511, p < 0.001) and PU (β = 0.523, p < 0.001) significantly influence impulsive usage. Furthermore, PEU (β = 0.187, p < 0.001) and PU (β = 0.511, p < 0.001) have significant direct effects on compulsive usage, while impulsive usage also has a positive but relatively small effect on compulsive usage (β = 0.140, p = 0.021). These findings indicate that perceived usefulness plays a more dominant role in driving compulsive behavior compared to perceived ease of use. The study highlights that while digital banking systems enhance efficiency and user engagement, they may also increase behavioral intensity and potential risks related to excessive usage. Therefore, digital banking providers should integrate system performance with responsible design strategies, such as behavioral control mechanisms, to support sustainable financial behavior.

Acknowledgment
The authors would like to express their sincere gratitude to Universitas Pendidikan Indonesia and Universiti Kebangsaan Malaysia for the academic support and facilities provided during the course of this research. We also extend our appreciation to all respondents who participated in the survey and contributed valuable insights. Finally, we acknowledge the constructive feedback from colleagues and reviewers, which greatly helped in improving the quality of this paper.

Type of the article: Research Article

Abstract
The growing use of Artificial Intelligence is revolutionizing bank operations and contributing to the emergence of financial platform ecosystems, especially in economies in transition with digital and regulatory transformation. little empirical research has been conducted on the effects of AI capabilities on the market performance of banks in integrated platform ecosystems, particularly in dual banking systems (commercial and Islamic banks). This study examines the influence of AI-based data analytics, AI-based automation, and AI-based decision-making systems on the market performance of Amman Stock Exchange-listed banks. It also explores the mediation of platform integration capability and the moderation of regulatory readiness. The study used a mixed-method approach with secondary market data from 2014–2025 and primary data from a survey of 368 valid observations of commercial and Islamic banks in Jordan in January-May 2025. The relationships were tested using Partial Least Squares Structural Equation Modeling. The findings indicated a positive impact of AI-powered data analytics (β = 0.29, p < 0.001), smart automation (β = 0.24, p = 0.001), and AI-powered decision support systems (β = 0.21, p = 0.002) on market performance. Digital platform integration capability partially mediated the relationships, while regulatory readiness positively moderated the effect of AI capabilities on market outcomes. It is argued that banks’ market performance can be improved by investing in AI capabilities along with a platform integration capability and regulatory readiness. The study offers insights for managers and policymakers to drive sustainable change in banking.

Type of the article: Research Article

Abstract
Mobile banking has emerged as a critical delivery channel for banks, particularly in emerging economies such as India, where sustained usage is essential for realizing long-term value. Despite extensive research on adoption, relatively less attention has been given to post-adoption behavior. This study aims to examine the impact of mobile banking quality, perceived trust, and perceived risk on post-adoption behavior, specifically customer satisfaction and continuance intention, and to analyze the mediating role of customer satisfaction. Data were collected from 345 active mobile banking users in India through a structured questionnaire. The focus on active users ensures that the findings reflect post-adoption evaluations based on actual usage experience. Partial Least Squares Structural Equation Modeling (PLS-SEM) was employed to analyze the data, with mobile banking quality modeled as a second-order construct comprising service quality, system quality, and information quality. The results indicate that mobile banking quality has a significant positive effect on customer satisfaction (β = 0.567, p < 0.001) and continuance intention (β = 0.245, p < 0.001). Perceived trust positively influences customer satisfaction (β = 0.118, p < 0.05) and continuance intention (β = 0.322, p < 0.001), while perceived risk negatively affects customer satisfaction (β = −0.217, p < 0.001) and continuance intention (β = −0.129, p < 0.001). Customer satisfaction also significantly mediates the relationships between mobile banking quality, perceived trust, perceived risk, and continuance intention. The findings highlight the importance of improving overall mobile banking quality, strengthening user trust, and reducing perceived risk to enhance customer satisfaction and promote sustained usage.

Type of the article: Research Article

Abstract
The shift toward digital banking has transformed how consumers build relationships with financial brands. As banking inter-actions increasingly occur through mobile applications and online platforms, understanding how emotional attachment is converted into customer loyalty has become important in digital banking research. This study aims to examine how the three dimensions of brand love – intimacy, passion, and commitment – influence customer loyalty through online brand experience, and how digital information overload moderates the relationship between online brand experience and customer loyalty. Data were collected from Vietnamese digital banking users through online and offline surveys conducted in June and July 2025. Respondents were required to have used their current digital banking brand for at least one year. After screening 593 responses, 527 valid questionnaires were analyzed using partial least squares structural equation modeling. The results show that intimacy and passion positively affect commitment, with path coefficients of 0.423 and 0.362, respectively. Intimacy, passion, and commitment positively influence online brand experience, with coefficients of 0.342, 0.314, and 0.280, respectively. Online brand experience strongly predicts customer loyalty (β = 0.637) and mediates the effects of intimacy, passion, and commitment on loyalty, with indirect effects of 0.218, 0.200, and 0.178. Digital information overload negatively moderates the online brand experience and loyalty relationship (β = –0.049). The findings confirm that emotional attachment strengthens customer loyalty through online brand experience, whereas excessive digital information weakens this process.

Acknowledgment
This research is partly funded by Industrial University of Ho Chi Minh City and University of Finance – Marketing.

Type of the article: Research Article

Abstract
FinTech growth in the Gulf has expanded digital access to banking services, but cyber-risk governance has not advanced at the same pace. This study develops and applies a quantitative framework to evaluate institutional, systemic, predictive, and probabilistic dimensions of cyber risk across Gulf financial technology ecosystems, including commercial banks, digital wallets, and payment platforms. The empirical design combined an application-level sample of ten leading mobile financial platforms with a vulnerability-level observation dataset generated through repeated static and dynamic security assessments between July 2024 and May 2025. The analysis integrated comparative statistical testing, extreme value modeling, dependency analysis, machine learning classification, and Bayesian estimation. The results revealed significant institutional divergence in vulnerability severities (p < 0.01), with Saudi Arabian Android banking applications recording the highest mean score (8.12) and UAE iOS applications the lowest (7.29). The risk distribution displayed a heavy-tailed structure, with a shape coefficient of 0.22 and a scale coefficient of 0.78, indicating that rare but severe vulnerabilities dominate exposure. Dependency modeling identified systemic linkages between platform type, regulatory environment, and vulnerability category, with correlations ranging from 0.29 to 0.36. Machine learning classification achieved 85% accuracy and 84% precision, while Bayesian estimation produced narrow 95% credibility intervals. The findings highlight distinct, quantifiable cyber-risk patterns across Gulf banks and FinTech platforms and support the need for integrated, data-driven supervisory frameworks.

Type of the article: Research Article

Abstract
Banking systems in emerging economies face mounting exposure to geopolitically induced shocks, yet the precise transmission pathways through which geopolitical disruptions translate into fundamental banking vulnerabilities remain poorly understood, particularly in the ASEAN region. This study examines how geopolitical risk propagates into credit, liquidity, and operational dimensions of banking stability across five major ASEAN economies during the period 2022–2024. Employing a quantitative panel design, the study draws on daily-frequency data from 75 conventional commercial banks operating in Indonesia, Malaysia, Singapore, Thailand, and the Philippines. The analytical framework integrates a newly constructed ASEAN Geopolitical Risk Index derived from text mining and Natural Language Processing applied to over 50,000 regional news articles with Vector Autoregression (VAR) estimation, fixed-effects panel regression, and network-based spillover analysis. Results demonstrate that geopolitical risk exerts a statistically significant positive effect on credit risk (NPL: β = 0.324, p < 0.01) and liquidity risk (LDR: β = 0.287, p < 0.01), while its effect on operational risk (BOPO: β = 0.198, p < 0.05) is heterogeneous across countries. Singapore and Malaysia exhibit superior resilience compared to Indonesia and the Philippines. Network analysis identifies a credit-to-liquidity contagion mechanism with a transmission lag of two to three trading days, and spillover intensity escalates non-linearly with geopolitical stress severity. The study contributes the first region-specific geopolitical risk index for ASEAN, a hybrid VAR-network methodology for systemic risk analysis, and actionable evidence for macroprudential policy design and early warning system development in the region.