Digital Lending, Accounting Disclosure Quality, and Banking Risk: Implications for Financial Stability

Authors: Aromirowe Oluseun Samuel; Ojo Oluwafunsho Adenike; Eseoghene Deborah Mbazor; Peter Emeke Osenum

Affiliation: Department of Banking and Finance, Osun State Polytechnic, Nigeria,

Corresponding Author: [email protected]

May 22, 2026

SIAR-Global Journal of Economics, Finance & Accounting

Zenodo DOI: 10.5281/zenodo.20343828

Crossref DOI: 10.66694/siar.gjefa20262002

Digital Lending, Accounting Disclosure Quality, and Banking Risk: Implications for Financial Stability

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Abstract

Digital lending has become an important component of modern financial intermediation as banks, fintech firms, platform companies and non-bank financial institutions increasingly use alternative data, digital transactions and algorithmic credit scoring to originate, price and monitor credit. Although digital lending can improve credit access, reduce information asymmetry and support financial inclusion, it also creates new challenges for accounting disclosure, banking risk management and macroeconomic stability. This study examines the cross-disciplinary integration of digital lending data into accounting disclosure and banking risk frameworks, with emphasis on implications for financial intermediation and financial-system resilience. Using a proposed country-year panel framework covering 44 countries from 2015 to 2023, the study investigates the relationship between digital lending intensity, accounting disclosure quality, banking risk, financial intermediation and macroeconomic stability. Digital lending intensity is measured as digital lending volume scaled by gross domestic product, while banking risk is proxied by nonperforming loans. Bank Z-score and capital adequacy are used as alternative measures of financial stability. Accounting disclosure quality is proxied by IFRS adoption or, alternatively, by a disclosure index based on expected credit loss disclosure, digital lending exposure, credit risk segmentation, model risk disclosure and macroeconomic assumption reporting. The illustrative findings suggest that digital lending intensity is positively associated with banking risk, while accounting disclosure quality reduces this risk and moderates the relationship between digital lending and banking risk. The results further suggest that digital lending can deepen financial intermediation by expanding private credit, but its stability effects depend on the strength of disclosure, governance and regulatory oversight. The study contributes to fintech, accounting and banking literature by showing that digital lending data should not remain limited to operational credit-scoring systems; rather, they should be integrated into IFRS 7 risk disclosure, IFRS 9 expected credit loss estimation, bank risk dashboards, model validation processes, supervisory reporting and macroprudential monitoring. The study concludes that sustainable digital lending requires transparent accounting disclosure, robust model governance and effective integration of digital credit data into banking risk frameworks.

Keywords

digital lending; accounting disclosure; banking risk; IFRS 9; IFRS 7; fintech credit; financial intermediation; macroeconomic stability; expected credit loss; digital finance

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Aromirowe Oluseun Samuel; Ojo Oluwafunsho Adenike; Eseoghene Deborah Mbazor; Peter Emeke Osenum (2026). Digital Lending, Accounting Disclosure Quality, and Banking Risk: Implications for Financial Stability. SIAR-Global Journal of Economics, Finance & Accounting, Vol. 2, No. 2. DOI: 10.5281/zenodo.20343828

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Digital Lending, Accounting Disclosure Quality, and Banking Risk: Implications for Financial Stability

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SIAR-Global Journal of Economics, Finance & Accounting