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Author: search.filters.author.González-Rossano, CarlosLanguage: search.filters.language.English

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    Intersection of Banking, Social Welfare, and Digital Transformation: The Mexican Case, a Latin American Perspective
    (Springer Nature Switzerland, 2025)
    Terán-Bustamante, Antonia  
    ;
    González-Rossano, Carlos
    ;
    Rivas Aceves, Salvador  
    The banking system has been instrumental in developing economies throughout history, as it has effectively directed the funds collected from their clients’ savings and investments into productive activities of individuals and enterprises, financed consumer goods and current expenditures, housing and infrastructure projects, and provided market liquidity. However, in Latin America and amid digital transformation, banks face the dual challenge of modernizing operations while addressing socio-economic disparities. This study shows that fluctuations in operational measurements of top Mexican banks significantly affect changes in the widely used global measure of social welfare, the Human Development Index. We evaluated findings by using a machine learning prediction model and a panel data estimation, and underline how digital transformation in banking using emerging technologies to increase public access to financial services, especially credit loans for marginalized populations, can improve customer experience and financial inclusion to exploit this correlation. This approach provides a framework for understanding the potential of digital technologies to drive competitive advantages and social benefits across Latin America. ©The authors ©Springer.
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    What Drives Profit Income in Mexico’s Main Banks? Evidence Using Machine Learning
    (2023)
    González-Rossano, Carlos
    ;
    Terán-Bustamante, Antonia  
    ;
    Velázquez-Salazar, Marisol  
    ;
    Martínez Velasco, Antonieta Teodora  
    Historically, the banking system has been critical to the development of economies by addressing funds efficiently—from customer savings and investors to the productive activities of people and companies, financing consumer goods and current expenses, housing, infrastructure projects and providing liquidity to the market. However, it must be transformed to respond to emerging demands in society for better financial products and services with a positive impact on living conditions and well-being. To achieve this, banks must create economic value—that is to say, banks should create profits in a sustained manner—in order to also create social value and thus generate shared value. The purpose of this study was twofold. The first aim was to identify the main factors that contributed to the majority of Mexican banking profits in the period from 2003 to 2021; the second aim of the study was to provide an innovative metric of banking performance. Using supervised machine learning algorithms and Principal Component Analysis, two prediction models were tested, and two banking performance indices were defined. The findings show that Random Forest is a reliable profit prediction model with a lower mean absolute error between the predicted yearly profit and losses and the actual data. There are no significant ranking position differences between the two performance indices. The first performance index obtained is novel due to its simplicity, since it is built on the basis of five values associated with commercial banking activity. In Mexico, no similar studies have been published. The indicator most widely used by regulators worldwide is the CAMELS index, which is a weighted average of the capital adequacy level, asset quality, management capacity, profitability, liquidity, and sensitivity to market risk. Its scale of 1 to 5 is useful for identifying the robustness and solvency of a bank, but not necessarily its capacity to generate profits. This approach might encourage banks to remain aware of their potential to create shared value and to develop competitive strategies to increase benefits for stakeholders. © 2023 by the authors.
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