Analytical Modeling in Financial Institution Management – Integrating Stability and Sustainable Development Principles

BACKGROUND In the context of the growing role of nonfinancial factors in the banking sector, the issue of assessing the impact of environmental, social, and governance (ESG) indicators and digital maturity on the financial stability of banks is of particular relevance. Digitalization, combined with environmental and social challenges, creates new risks and requires a revision of approaches to strategic management. The purpose of the study is to examine the impact of the ESG index and digital maturity on the key indicators of financial sustainability of Ukrainian banks (return on equity and capital adequacy ratio) based on a quantitative model. MATERIALS AND METHODS Methodologically, the study is based on regression and correlation analyses using linear modeling in the SPSS environment, as well as the development of a composite index—the Sustainable Banking Index (SBI). RESULTS As a result, a statistically significant negative impact of both ESG indicators and digital maturity on profitability and capital adequacy has been found, which indicates the short-term financial costs of implementing nonfinancial strategies. The proposed integrated SBI indicator has demonstrated a high strength of connection with key financial parameters and proved to be an effective tool for forecasting the capital burden. CONCLUSION The practical significance of the work lies in the possibility of using the SBI as a dynamic tool for monitoring the sustainability of banks in the context of digital transformation. The results can be implemented in the system of strategic audit, risk assessment, and planning of digital and ESG initiatives in financial institutions. The study also lays the foundation for the development of adaptive models that combine nonfinancial parameters with classical financial indicators in the processes of bank resilience management.