Purpose – Commercial and Islamic banks are important players in the UAE financial market. However, little is known about their financial distress because these financial institutions usually resolve financial distress within their own organisations, which means that outsiders cannot explicitly observe distress. The purpose of the research is therefore to identify the main drivers of financial institutions' financial distress. Design/methodology/approach – The paper estimates a probability distress prediction model using the BankScope Database and the annual reports of UAE financial institutions submitted to UAE Security Exchange Authority. The paper also analyses the impact of macroeconomic information for forecasting financial institutions' financial distress. Findings – The fundamentals of financial institutions in terms of cost income ratio, equity to total assets, total asset growth and ratio of loan loss reserve to gross loans (all these variables with a lag of one year) positively impacted the probability of financial distress in the next year. Recent findings for emerging economies have cast some doubt on the usefulness of macroeconomic information for financial institutions' risk assessment. Similar results are found for UAE financial institutions in predicting the probability of financial distress. Originality/value – This is the first study to provide empirical evidence on the drivers of financial distress of commercial and Islamic banks in UAE during 2000-2008, and to examine the extent of the financial distress that can be can be attributed to internal bank-specific fundamental factors and external factors in the economy.

Introduction: The expanded BRICS block presents significant opportunities for SMEs (Small and Medium Enterprises), but challenges related to financial literacy and digital access hinder their potential. While global efforts emphasize financial literacy and digitization as key drivers of economic growth, especially in developing regions, their specific impact on SMEs in the BRICS block remains underexplored. This paper contributes to the literature by contextualizing how financial literacy and digital financial access influence SME sustainability and economic progress, particularly in light of ongoing efforts to bridge the digital divide.Methods: Using Principal Component Analysis to reduce dimensionality, the study uses advanced Random Forest Tree modeling, to evaluate current practices in SME finance, credit access, and digitization.Results: Results indicate that both financial literacy and digitalization play pivotal roles in driving sustainable economic development, with significant implications for policy interventions aimed at supporting SME growth in emerging economies.Discussion: This study addresses the crucial intersection of SME financial literacy and digital financial access, focusing on their role in fostering economic development within the expanded BRICS block-a group now comprising major emerging economies that collectively face substantial disparities in financial inclusion. The study results are relevant not only for understanding the BRICS context but also for shaping global strategies toward inclusive financial systems and SME resilience in the digital era.

Purpose – There is growing demand for research approaches that consider the functioning of financial markets in the emerging economy. The current paper aims to examine cointegration and volatility persistence of six Middle East emerging Arabian Gulf Cooperation council (AGCC) equity markets with developed markets. Design/methodology/approach – The study uses the MGARCH and VAR methodology to analyze the cointegration and volatility spillover across emerging AGCC markets and developed markets. Time series stock return data for six AGCC countries from February 2003 to January 2006 are used from Shuaa Capital Market together with MSCI world developed market index. Findings – The study shows that AGCC markets exhibit significant own and cross spillover of innovations and volatility spillover and persistence in these markets. Emerging markets in AGCC derive relatively more of their innovations and volatility persistence from within the domestic market. Practical implications – The results imply that, emerging AGCC markets are susceptible to conditions within the AGCC region. This increases potential benefits of international diversification for international investors. The study findings have implications for security pricing within AGCC markets, for hedging and other trading strategies, and for regulatory polices conducted within financial markets. Originality/value – The paper provides empirical evidence and justification for investors, both individual and foreign institutional, to adjust their portfolios through diversification.