Which Cases Do Commercial Banks Fall Into After Adopting Artificial Intelligence? Evidence From the Asia‐Pacific

From the perspective that returns and risks are inherently intertwined, this paper aims to examine the association between artificial intelligence (AI) adoption and return–risk outcomes for commercial banks. Using an unbalanced panel of 426 Asia‐Pacific commercial banks across 20 markets from 2015 to 2021, we find that banks adopting AI are initially associated with a best‐case return–risk configuration, characterized by an optimal scenario (higher profits coupled with lower risks). Over time, this configuration shifts toward a worst‐case scenario (lower profits and higher risks). Such return–risk effects are heterogeneous depending on bank size, IT governance and market development. These findings remain consistent across several robustness tests, including alternative measures, dynamics, model specifications and sample selection.