Enhancing Sustainable Innovation Performance in the Banking Sector of Libya: The Impact of Artificial Intelligence Applications and Organizational Learning

The recent transformation in Libya's banking industry, driven largely by the Central Bank of Libya, has led to increased financial inclusion, enhanced banking services, and the adoption of digital banking technologies. While most banks have rapidly transitioned from traditional data analysis methods to using Artificial Intelligence (AI) for daily transaction analysis, the impact of AI on sustainable innovation performance and organizational learning remains underexplored. This study, grounded in dynamic capabilities theory, investigates the mediating role of organizational learning in the relationship between AI adoption in the banking sector and sustainable innovation performance. Data were collected from 401 employees across Libya's conventional and Islamic banking sectors using a judgmental sampling technique. Partial Least Squares Structural Equation Modeling (PLS-SEM) was used to analyze the data and assess the relationships among the variables. The findings indicate that AI adoption significantly and positively influences sustainable innovation performance and organizational learning. Additionally, organizational learning was found to have a significant positive effect on sustainable innovation performance and to partially mediate the relationship between AI adoption and innovation performance. The study recommends that bank management teams implement training programs to enhance employees' understanding of AI applications, sustainability objectives, and innovative financial services to improve overall efficiency.