Financial resilience in ASEAN-4 banking sector: Impact of cyber risk disclosure

Abstract

The increasing complexity and digitalization of the banking industry has the potential for cyber risks that can disrupt banking performance. This study aims to investigate whether voluntary Cyber Risk Disclosure (VCRD) influences banks’ financial resilience. This study, to the researcher’s knowledge, is a preliminary study that analyzes VCRD and financial resilience in ASEAN-4 financial industry. The sample used consisted of 310 observations from 62 banks listed on the Indonesia, Malaysia, Thailand, and the Philippines Stock Exchanges during the 2015–2020 period. Voluntary CRD are proxied by the governance, causes and impacts of cyber risk. The study result shows that total and individual voluntary CRD reduces bank resilience unless the causes of cyber risk does not affect it. These results remain unchanged after examining a robustness test. The implications of this finding are ASEAN-4 financial regulators should continue to put more pressure on disclosure of cyber threats as “events like this are important to the market”. However, disclosure can weaken the financial resilience of banks so that the cooperation of many parties is needed and regulatory intervention is very important.