Digital transformation, diversification and stability: What do we know about banks?

Mudeer Ahmed Khattak, Mohsin Ali, Wajahat Azmi and Syed Aun R. Rizvi

Economic Analysis and Policy, 2023, vol. 78, issue C, 122-132

Abstract: Banks focus on digital transformation to improve their overall efficiency and reduce operational costs. In this study, we argue that banks focusing on diversification might not benefit from digital transformation in context of stability. Precisely, this study explores the impact of digital transformation on banks’ stability while considering diversification as an important factor. Overall, the results suggest that investment in technology and increased diversification makes banks riskier and more fragile. More importantly, we report digital transformation and the diversification to be substitutes in impacting the stability. In other words, we show digital transformation is beneficial for banks with low-income diversification. The reported findings have implications.

Keywords: Digital transformation; Diversification; Stability; Asia; Technology (search for similar items in EconPapers)
JEL-codes: G21 G33 G38 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:78:y:2023:i:c:p:122-132

DOI: 10.1016/j.eap.2023.03.004

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