The impact of digitalization and ESG factors on sustainable development of the banking sector in Kazakhstan

Abstract

This study analyzes the impact of digitalization and the integration of environmental, social, and economic factors on the sustainable development of the Kazakhstani banking sector. The methodological basis of the study is represented by the following methods: statistical analysis, strategic analysis, comparative analysis, and empirical analysis. The results of the study show a significant positive interconnection between the level of digitalization and commercial bank profitability (R² = 0.82), which indicates the importance of digital transformation for improving the financial efficiency of the banking sector. In addition, the study revealed that the integration of ESG criteria has a positive impact on the sustainability of second-tier banks in the long term, while in the short term, this impact on financial results was not so statistically obvious. The results obtained during the study complement the existing scientific knowledge on the links between digitalization processes and the implementation of ESG principles into the sustainable development of the banking sector in the context of global changes. The results of the study may be useful for the strategic planning of banking activities, as well as for further research in the field of studying the impact of digitalization and environmental, social, and governmental factors on the sustainable development of second-tier banks.