Capital Risk Management of Commercial Banks in The Context of Digital Transformation

Authors

  • Bakhromov Nodirjon Muxammadamin o‘g‘li Deputy Head of Department of Xalq Bank of Uzbekistan, Higher School of Business and Entrepreneurship under the Cabinet of Ministers, Independent Researcher

DOI:

https://doi.org/10.51699/cajitmf.v7i1.1094

Keywords:

Digital Transformation, Capital Risk, Basel IV, Model Risk, Cyber Risk, Regtech, Suptech, Artificial Intelligence, RWA, SMA Model, Uzbek Banking Sector, Empirical Analysis, Risk Management

Abstract

This article provides an in-depth theoretical and empirical study of the impact of digital transformation processes (digital banking, artificial intelligence (AI), big data, blockchain, and open banking) on ​​the capital risk management system of commercial banks. Within the framework of Basel III/IV requirements, the impact of credit, market, operational, liquidity, and emerging digital risks (model risk, cyber risk, third-party risk, and concentration risk) on Risk Weighted Assets (RWA) and Capital Adequacy Ratio (CAR) indicators is analyzed. The effectiveness of RegTech (Regulatory Technology) and SupTech (Supervisory Technology) solutions is evaluated on the example of international (European and US banks) and Uzbek commercial banks. As a scientific innovation, an expanded Standardized Measurement Approach (SMA) model for calculating operational risk in the conditions of Uzbekistan is proposed, which necessarily takes into account digital risks (cyber factor, model risk, and third-party factor). The empirical analysis is based on data from 50 international and 15 Uzbek banks for 2022–2025, and the results are proven through regression models (OLS and panel data). The results show that digital transformation can increase RWA by an average of 18–25%, but the proposed model can maintain capital adequacy at a stable level of 1.5–2.2 times.

References

M. Abusharbeh, “The financial soundness of the Palestinian banking sector: an empirical analysis using the CAMEL system,” Banks and Bank Systems, vol. 15, no. 1, pp. 85–97, Mar. 2020, doi: 10.21511/bbs.15(1).2020.09.

L. S. Oppusunggu and Y. R. M.Allo, “Risk Profile Assessment ofRisk profile assessment of core capital adequacy: capital adequacy tier-book strategy Core Capital Adequacy: Capital Adequacy Tier-Book Strategy,” JPPI (Jurnal Penelitian Pendidikan Indonesia), vol. 9, no. 2, p. 631, Jun. 2023, doi: 10.29210/020222055.

M. Fokhrul Hasan, “Trend analysis of Capital Adequacy Ratio of State Owned Commercial Banks (SOCBs) of Bangladesh from 2018 to 2022,” International Journal of Science and Research (IJSR), vol. 13, no. 3, pp. 31–36, Mar. 2024, doi: 10.21275/sr24224095130.

C. CHEN, “More Environmental Disclosure, Higher Capital Adequacy Ratios? Evidence from Chinese Commercial Banks,” 2024, doi: 10.2139/ssrn.4919716.

Z. Gu, R. Liu, D. Li, and W. Jiang, “Testing Scenario Framework for Intelligent Vehicle Cyber-Physics System,” in CICTP 2024, American Society of Civil Engineers, Dec. 2024, pp. 459–468. doi: 10.1061/9780784485484.045.

C. Ke, “Exploring the Trade-off Between Accuracy and Transparency in Credit Risk Prediction Models,” Theoretical and Natural Science, vol. 142, no. 1, pp. 121–128, Oct. 2025, doi: 10.54254/2753-8818/2025.dl27968.

G. Gasparri, “Risks and Opportunities of RegTech and SupTech Developments,” Front Artif Intell, vol. 2, Jul. 2019, doi: 10.3389/frai.2019.00014.

K. G. Bagdanov, “Threat Multiplier, and: Cause, and: INC, and: Indicator Species,” Colorado Review, vol. 52, no. 1, pp. 119–123, Mar. 2025, doi: 10.1353/col.2025.a954349.

G. Peters, P. Shevchenko, B. Hassani, and A. Chapelle, “Should the advanced measurement approach be replaced with the standardized measurement approach for operational risk?,” The Journal of Operational Risk, vol. 11, no. 3, pp. 1–49, Sep. 2016, doi: 10.21314/jop.2016.177.

H. Penikas, “History of the Basel internal-ratings-based (IRB) credit risk regulation,” Model Assisted Statistics and Applications, vol. 15, no. 1, pp. 81–98, Mar. 2020, doi: 10.3233/mas-190480.

G. Carlone, “Risk Perspective of Credit Valuation Adjustment,” in Introduction to Credit Risk, Chapman and Hall/CRC, 2020, pp. 65–68. doi: 10.1201/9781003036944-11.

D. E. Ayling, “Operational Risk Control with Basel II: Basic Principles and Capital Requirements,” Risk Management, vol. 7, no. 3, pp. 69–70, Jul. 2005, doi: 10.1057/palgrave.rm.8240223.

A. Macrae, “Discourse Analysis,” Jun. 2020, Oxford University Press. doi: 10.1093/acrefore/9780190201098.013.973.

R. Vicari, I. Tchiguirinskaia, and D. Schertzer, “Climate risks, digital media, and big data: following communication trails to investigate urban communities’ resilience,” Jul. 2018, doi: 10.5194/nhess-2018-200.

P. Kupiec, “Using a Mandatory Subordinated Debt Issuance Requirement to Set Regulatory Capital Requirements for Bank Credit Risks,” in Capital Adequacy beyond Basel, Oxford University PressNew York, 2005, pp. 146–170. doi: 10.1093/acprof:oso/9780195169713.003.0004.

R. Gwashy Young, “Digital Transformation and Cybersecurity in Banking: Managing Risks in a Cloud-First and Mobile-First World,” in Technology, AI, and Operational Security in Banking, Productivity Press, 2025, pp. 37–96. doi: 10.4324/9781003654742-2.

F. Kalfaoglou, “ESG risks: a new source of risks for the banking sector,” Economic bulletin, no. 53, pp. 83–112, 2021, doi: 10.52903/econbull20215305.

Downloads

Published

2025-12-15

How to Cite

Muxammadamin o‘g‘li, B. N. . (2025). Capital Risk Management of Commercial Banks in The Context of Digital Transformation. Central Asian Journal of Innovations on Tourism Management and Finance, 7(1), 256–259. https://doi.org/10.51699/cajitmf.v7i1.1094

Issue

Vol. 7 No. 1 (2026): January

Section

Articles

License

In submitting the manuscript to the Central Asian Journal of Innovations on Tourism Management and Finance, the authors certify that:

  • They are authorized by their co-authors to enter into these arrangements.
  • The work described has not been formally published before, except in the form of an abstract or as part of a published lecture, review, thesis, or overlay journal.
  • That it is not under consideration for publication elsewhere,
  • The publication has been approved by the author(s) and by responsible authorities – tacitly or explicitly – of the institutes where the work has been carried out.
  • They secure the right to reproduce any material that has already been published or copyrighted elsewhere.
  • They agree to the following license and copyright agreement.

License and Copyright Agreement

Authors who publish with Central Asian Journal of Innovations on Tourism Management and Finance agree to the following terms:

  1. Authors retain copyright and grant the Central Asian Journal of Innovations on Tourism Management and Finance right of first publication with the work simultaneously licensed under Creative Commons Attribution License (CC BY 4.0) that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
  2. Authors can enter into separate, additional contractual arrangements for the non-exclusive distribution of the Central Asian Journal of Innovations on Tourism Management and Finance published version of the work (e.g., post it to an institutional repository or edit it in a book), with an acknowledgment of its initial publication in this journal.
  3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) before and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work.