A METHODOLOGICAL FRAMEWORK FOR BANKING INNOVATION: LINKING EXPECTED CREDIT LOSS MODELLING, ESMS-BASED ESG SCREENING, DIGITAL LENDING TRANSFORMATION, AND GREEN FINANCE REPORTING
DOI:
https://doi.org/10.5281/zenodo.20047255Keywords:
IFRS 9, expected credit loss, ESMS, ESG screening, digital banking, end-to-end lending, investment analytics, green finance, impact reporting, commercial banks.Abstract
This paper develops an integrated framework for banking innovation in the digital economy by linking forward-looking expected credit loss measurement, ESG-based corporate credit screening, digital decision-making, and green finance monitoring. Using implementation evidence reported for selected commercial banks, the study examines four mutually reinforcing mechanisms. First, it refines portfolio-level expected credit loss estimation under IFRS 9 through a macro-scenario-sensitive and probability-aware approach to ECL measurement. Second, it embeds an environmental and social management system into corporate credit screening on the basis of ESG criteria. Third, it builds a digital decision architecture that combines investment analytics with end-to-end lending transformation in order to improve asset allocation, accelerate decisions, and reduce problem loans. Fourth, it introduces a digital monitoring product for green projects that strengthens reporting transparency and supports the mobilization of international financing. The reported case evidence indicates lower reserve intensity in relation to the loan portfolio, broader ESG screening coverage, better forecasting accuracy and portfolio performance, faster lending decisions, lower non-repayment, and additional international funding for environmentally friendly projects. The paper argues that banking innovation delivers stronger managerial results when provisioning, sustainability screening, process digitalization, and reporting infrastructure are designed as one integrated system rather than as isolated initiatives.
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