Unravelling the Behavioural Determinants of Bank Stability and Macroeconomic Impact in the Digital Era

Dependence on financial institutions and its stability has become the need of the hour, where individuals interact and perceive the operating indicators in a nuanced manner; banking services, acting as intermediaries, are a significant catalyst for various macroeconomic factors in the digital era. Enhancing the study to critical dimensions of institutions quality and fostering positive emotional experiences of banking customers, statistically affects the financial intermediaries in significant manner, there exists a dilemma of concentrating more on behavioural determinants instead of banking book performances fixed by regulators at periodic intervals. Digital platforms have really transformed the way of providing financial services keeping the internal context of convenience, proximity of availing the digital banking products and mitigates the potential cost of traditional banking systems. The banks cannot depend only on the technological investments alone in accelerating the economic factor to grow at rapid pace, ignoring the deepest layer of customer interaction, which is secluded practice among bankers rectifying the banking services by one-to-one interactions.

Improvising the relationship between financial entities and customer dealings builds trust and service quality the foremost factor in equating the macroeconomic stability in financial system. Trust crisis pilfers the stability factor of banking system, acts as the predominant factor in macroeconomic stability and interlinkage of economic agents in diminishes operational aspects of banking services. Customer facing factors in emerging financial markets is seen as core component of financial institutions stability purely affects the macroeconomic outcomes. The present study examines how behavioural determinants influences banking institution stability and how this stability transforms into impact on macroeconomic perceived outcomes within the digital era. It focuses on streamlining digital transformation, financial inclusion and banking institutions resilience has an uneven tone. The study proposes a structural model of customer trust, banking technology and service quality as exogenous constructs influencing banking institution stability and interlinking behavioural drivers to macroeconomic impact.

A total of 350 valid, completed responses were collected from banking customers in the northern zone of Tiruvallur district in Tamil Nadu and applied partial least squares structural equation modelling (PLS-SEM), reveals the determinants of customer trust, service quality, and the adoption of banking technology has strong impact factors in resilient banking. The study uses a hypothetical structural model of banking institution stability as a dependent variable and testing the independent constructs of customer trust, service quality, banking technology, macroeconomic impact and financial literacy. The moderating role of financial literacy on technology usage and Banking stability mediates the relationship between behavioural and economic development indicators, as the outcome which is perception-based. The Study stretches the traditional models of institutions stability by integrating with behavioural, technological and economic factors in a single framework. The results exhibit customer trust, service quality and banking technology has significant impact on banking institution stability.

Which in turn has macroeconomic impact transmitted through the mediating role and preludes indirect effect. The interaction effect shows the stabilising factor of technology has strong impact on customers