A Assessing the Impact of Organizational Readiness and DigitalFinancial Innovation on Financial Resilience: Evidence from Banking Sector of an Emerging Economy

Abstract

Commercial banks in Pakistan are confronted with increasing market volatility, regulatory challenges, and rapid technological changes. Each of these factors affects financial stability and adaptability, highlighting the need to understand how organizational readiness and digital financial innovation can enhance financial resilience. Therefore, this study aims to examine the impact of Organizational Readiness (OR) on Financial Resilience (FR) in the commercial banks of Pakistan. Additionally, the study investigates the mediating role of Digital Financial Innovation (DFI) between OR and FR. To achieve the study’s objectives, data were collected from managerial employees of commercial banks in Pakistan using self-administered surveys. The researcher employed the Partial Least Squares (PLS) method of Structural Equation Modeling (SEM) to test the hypotheses. The findings indicate that OR—including change valences, change efficacy, and contextual factors—has a substantial influence on FR. In Pakistan’s banking sector, DFI mediates the relationship between OR and FR. The study concludes that organizational readiness, comprising change valences, change efficacy, and contextual factors, makes a significant contribution to improving financial resilience in commercial banks. Furthermore, the proposed relationship is strengthened by the inclusion of digital financial innovation, emphasizing the critical role of technology in bridging organizational readiness and financial stability in an evolving financial environment. The findings provide theoretical implications according to Organizational Readiness theory as well as practical implications for the banking sector in Pakistan. Since the findings are specific to the Pakistani financial industry, future research could conduct cross-national studies for greater generalizability.