Abstract— After the catastrophic outcome of the 2008 financial crisis Basel III intrudes new instruments to increase the banks sector stability. Banking sectors depend on a sophisticated en- semble of information systems for bank risk management. There- fore, this study investigates the impact of bank capital, infor- mation systems, charter value, control systems and market disci- pline regarding bank risk. The presented focus is on understand- ing to what extent do information systems increase the stability of banking sectors by using panel data from Palestine over the peri- od from 1996-2014. In addition, Partial Least Square (PLS) is used to analysis the sample which includes 244 questionnaires from listed banks. The findings show that information systems are the most important predictor of bank risk, which is partly supported by Basel III. Therefore, this study is important not just for Palestine but also to those that have concern of bank risk trying to find a solution to future bank default. Index Terms—Information systems, Control system, Bank risk, Basel III, Palestine. I. INTRODUCTION ANK risk management is one of the most important issues for bankers worldwide [1]. There are several examples of financial and banking crises; from Mexico at the end of 1994 and early 1995, to the Southeast Asia Banking Crisis [2], Bra- zil, Russia and Turkey, and the global financial crisis in 2008 [3, 4]. Those successive banking crises directed the attention of international economic and financial institutions such as the International Monetary Fund (IMF), the Bank for International Settlements (BIS), and the Group of Twenty (G-20) [5, 6]. Since those crises have a negative impact on globalization and since the mentioned countries adopted and encouraged the acceleration of financial and economic globalization [7, 8]. Therefore, they studied the reasons for the banking crises, especially the most significant cases, and then developed ap- propriate solutions [9, 10]. It turned out that the most effective reasons for banking cri- ses are the increasing banking risks on one hand, and the bad management of those crises on the other [11, 12]. Moreover, the weak internal and external supervision (national control Manuscript received December 18, 2016; revised March 6, 2017; revised April 11, 2017. This is supported by the Nation Natural Science Foundation of China under number 71173060. A. Alfarra and H. Xiaofeng are with the School of Management, Harbin Institute of Technology, Harbin 150001, China. A. Hagag is with the Department of Computer Science, Harbin Institute of Technology, Harbin 150001, China (e-mail: ahagag88@gmail.com). Mahmoud A. Eissa is with the Department of Mathematics, Harbin Insti- tute of Technology, Harbin 150001, China. authorities) [4], and the non-adequate disclosure about the nature and range of risks [13] are further reasons. Banks use a remarkably sophisticated ensemble of information technolo- gies for supporting their management control systems and enabling oversight by government regulators and industry watchdogs [14, 15]. Banks depend on a global network of data processing and information systems to provide their core banking services and to manage the complex financial and macroeconomic elements of their environment [15, 16]. In light of technological and financial developments in risk management safety and stability of the financial and banking systems depend on the bank's success in adopting sound and efficient strategies and systems for different banking risk management [17, 18]. In addition to policies that improve the quality of assets, particularly the loan portfolio, in order to reduce its risks and develop accounting systems, transparency, and disclosure, in accordance with international and local standards for accounting systems is necessary [19, 20]. More- over, developing information systems and credit portfolios of the previous years. Also, providing human resources which enhance the capital adequacy "bank solvency" [21, 22]. Since the strongly capitalized banks which are managed by good management have the ability to face losses and grant credit to their clients and business facilities through the business cycle "economic volatility," this helps to strengthen public confi- dence in the banking system. This research develops and tests a model of bank risk-taking with the primary focus being the role of bank disciplinary tools: bank capital, information systems, charter value, control systems and market discipline. This is the first study to explic- itly analyze the influence of information systems and control systems on bank risk. Accordingly, the main goal of this study is to investigate to what extent the development of information systems leads to increased banking stability and decreased bank risk. Our sample includes panel data over the period from 1996-2014. In addition, 244 questionnaires from listed banks across the country of Palestine were used to validate our results. The findings show that bank risk is negatively related to information systems and positively related to control sys- tems. Moreover, the results show that information systems factor is the most important predictor of bank risk. The rest of the paper is organized as follows. Section II highlights the Palestine institutional background. Section III presents a literature review and hypotheses development. Sec- tion IV presents the research models. Section V documents the results and discussions. Section VI concludes this paper. Potential Influence of Information Systems on Bank Risk Ahmed N. K. Alfarra, Hui Xiaofeng, Ahmed Hagag, Member, IAENG, and Mahmoud A. Eissa B IAENG International Journal of Computer Science, 44:2, IJCS_44_2_08 (Advance online publication: 24 May 2017) ______________________________________________________________________________________