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This paper aims to assess human capital efficiency's impact on commercial banks' credit risk in six GCC member countries.

The study employs quarterly balanced panel data of banks between 2014 and 2019. The authors use three different constructs of credit risk, namely the probability of default which is a forward-looking quantification, a book value-based infection ratio and independent opinion of credit ratings, to assess the relationship with human capital efficiency. Different macro and firm-specific control variables are introduced, including a dummy for technological innovation and a GARCH-based measure of oil price volatility.

The findings of this study reveal that human capital efficiency is negatively related to the credit risk profile and banks with higher human capital efficiency tend to have lower credit risk. These results remained robust across the three definitions of credit risk used in this study.

This study is unique in exploring the impact of human capital efficiency on credit risk because credit risk is not only a central determinant of bank performance but also can trigger a systemic panic. Therefore, it is vital to assess its relationship with human capital efficiency. The different constructs of credit risk are innovative with reference to human capital. Lastly, using EVA as a measure of value addition in the context of human capital efficiency is a methodological contribution.

Climate change poses effect on banking sector’s risks and profitability through adaptation of green technology. This study aims to incorporates green technology adaptation in three sectors: green banking, green entrepreneurial innovation (EI) and green human resource (HR), in a model of bank’s performance. And determines the impact of climate change on bank risk and profitability.

An assessment of profitability and risk profile of commercial banks is done for 27 European countries for 2013–2022, employing a two-step difference system-generalized method of moments estimation technique with a moderate effect of climate change by including interaction between climate change and green technology adaptation.

The results indicate that green banking increases profitability, reduces credit risk and increases liquidity risk. The results also show that green human resource increases profitability and becomes a source of credit and liquidity risks for the banks. Green EI increases credit risk and liquidity risk, while the effects of green EI on profitability vary with the use of two proxies: Green patents increase profitability and environment, social and corporate governance (ESG) scores decrease profitability.

Supportive government initiatives, including subsidies and tax rebates to green borrowers, may take the burden of green transition off the banking sector.

This paper observes the impact of green technology adaptation in three sectors: banks, EI and HR, moderated by climate change, adding substantially to the existing literature in conceptual framework and methodology.