Digital finance and banking stability: balancing inclusion and risk in Asian economies
This study investigates the relationship between digital financial inclusion (DFI), the digital economy (DE), and bank stability across 33 Asian economies from 2010 to 2022. Using Z-score (ZS) and Non-Performing Loans (NPLs) as measures of stability, the analysis employs Generalized Method of Moment...
| Main Authors: | , , , , , |
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| Format: | Article |
| Language: | English |
| Published: |
Penerbit Universiti Kebangsaan Malaysia
2025
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| Online Access: | http://journalarticle.ukm.my/25822/ http://journalarticle.ukm.my/25822/1/SME%2018.pdf |
| _version_ | 1848816459823710208 |
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| author | Muhammad Iatzaz Ul Hassan, Wu, Mengyun Kashif, Umair Rasool, Yasir Sohu, Jan Muhammad Akhtar, Muhammad |
| author_facet | Muhammad Iatzaz Ul Hassan, Wu, Mengyun Kashif, Umair Rasool, Yasir Sohu, Jan Muhammad Akhtar, Muhammad |
| author_sort | Muhammad Iatzaz Ul Hassan, |
| building | UKM Institutional Repository |
| collection | Online Access |
| description | This study investigates the relationship between digital financial inclusion (DFI), the digital economy (DE), and bank stability across 33 Asian economies from 2010 to 2022. Using Z-score (ZS) and Non-Performing Loans (NPLs) as measures of stability, the analysis employs Generalized Method of Moments (GMM), Generalized Least Squares (GLS), and Panel-Corrected Standard Error (PCSE) models. The findings show that DFI negatively impacts ZS and increases NPLs, indicating higher risks associated with financial inclusion. Conversely, DE positively affects ZS, enhancing bank stability, although its effect on NPLs is minimal. These results highlight the double-edged nature of DFI and the stabilizing role of DE in the banking sector. Policymakers must balance efforts to promote DFI with measures to manage associated risks, such as improving credit assessment tools and strengthening digital infrastructure. This study contributes to understanding the dynamics of digital financial transformation and its implications for banking risk in developing economies. |
| first_indexed | 2025-11-15T01:06:13Z |
| format | Article |
| id | oai:generic.eprints.org:25822 |
| institution | Universiti Kebangasaan Malaysia |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-15T01:06:13Z |
| publishDate | 2025 |
| publisher | Penerbit Universiti Kebangsaan Malaysia |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | oai:generic.eprints.org:258222025-09-04T08:15:18Z http://journalarticle.ukm.my/25822/ Digital finance and banking stability: balancing inclusion and risk in Asian economies Muhammad Iatzaz Ul Hassan, Wu, Mengyun Kashif, Umair Rasool, Yasir Sohu, Jan Muhammad Akhtar, Muhammad This study investigates the relationship between digital financial inclusion (DFI), the digital economy (DE), and bank stability across 33 Asian economies from 2010 to 2022. Using Z-score (ZS) and Non-Performing Loans (NPLs) as measures of stability, the analysis employs Generalized Method of Moments (GMM), Generalized Least Squares (GLS), and Panel-Corrected Standard Error (PCSE) models. The findings show that DFI negatively impacts ZS and increases NPLs, indicating higher risks associated with financial inclusion. Conversely, DE positively affects ZS, enhancing bank stability, although its effect on NPLs is minimal. These results highlight the double-edged nature of DFI and the stabilizing role of DE in the banking sector. Policymakers must balance efforts to promote DFI with measures to manage associated risks, such as improving credit assessment tools and strengthening digital infrastructure. This study contributes to understanding the dynamics of digital financial transformation and its implications for banking risk in developing economies. Penerbit Universiti Kebangsaan Malaysia 2025 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/25822/1/SME%2018.pdf Muhammad Iatzaz Ul Hassan, and Wu, Mengyun and Kashif, Umair and Rasool, Yasir and Sohu, Jan Muhammad and Akhtar, Muhammad (2025) Digital finance and banking stability: balancing inclusion and risk in Asian economies. Sains Malaysiana, 54 (6). pp. 1641-1656. ISSN 0126-6039 https://www.ukm.my/jsm/english_journals/vol54num6_2025/contentsVol54num6_2025.html |
| spellingShingle | Muhammad Iatzaz Ul Hassan, Wu, Mengyun Kashif, Umair Rasool, Yasir Sohu, Jan Muhammad Akhtar, Muhammad Digital finance and banking stability: balancing inclusion and risk in Asian economies |
| title | Digital finance and banking stability: balancing inclusion and risk in Asian economies |
| title_full | Digital finance and banking stability: balancing inclusion and risk in Asian economies |
| title_fullStr | Digital finance and banking stability: balancing inclusion and risk in Asian economies |
| title_full_unstemmed | Digital finance and banking stability: balancing inclusion and risk in Asian economies |
| title_short | Digital finance and banking stability: balancing inclusion and risk in Asian economies |
| title_sort | digital finance and banking stability: balancing inclusion and risk in asian economies |
| url | http://journalarticle.ukm.my/25822/ http://journalarticle.ukm.my/25822/ http://journalarticle.ukm.my/25822/1/SME%2018.pdf |