Abstract
This paper examines the dual impact of digitalization on the banking sector from 2013 to 2024, using factor analysis and applied economic modelling to assess how digital tools, regulatory frameworks, and institutional performance interact in shaping financial crime dynamics. The results reveal that while digitalization improves operational efficiency and monitoring capacity, it also exposes structural weaknesses that facilitate illicit activities. Policy implications emphasize the need for robust regulation, strategic governance, cybersecurity investment, and capacity building to ensure that digitalization serves as a driver of innovation, trust, and financial stability. This study contributes empirical evidence to the applied economics literature on the complex role of digitalization in both enabling and mitigating corruption risks in emerging markets.Copyright© 2025 The Author(s). This article is distributed under the terms of the license CC-BY 4.0., which permits any further distribution in any medium, provided the original work is properly cited.Article’s history: Received 25th of August, 2025; Revised 9th of September, 2025; Accepted 18th of September, 2025; Available online: 30th of September, 2025. Published as article in the Volume XX, Fall, Issue 3(89), 2025.