THE EFFECTS OF FINTECH ADOPTION ON BANK PROFITABILITY: EVIDENCE FROM ARAB EMERGING MARKETS
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Date
2024-09-11
Authors
Hasan Farhood
Journal Title
Journal ISSN
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Publisher
An-Najah National University
Abstract
This study examines the impact of financial technology (fintech) adoption on bank profitability across eight countries from 2015 to 2022, employing the system generalized method of moments for analysis. The research addresses the ongoing ambiguity surrounding the relationship between fintech adoption and bank profitability. As technological innovation profoundly transforms the financial sector, it is crucial to determine whether fintech integration enhances or diminishes the profitability metrics of banking institutions.
This research assumes significance by contributing a consolidated and profound analysis of the conflicting evidence surrounding the intricate interplay between Fintech adoption and the of bank profitability within the banking sector. The anticipated findings are poised to inform strategic decision-making among banking practitioners, policymakers, and researchers, thereby fostering a more informed and strategic approach the evolving landscape of financial technology.
The study's sample consists of 55 banks, including those from Jordan, Palestine, and the Gulf Cooperation Council (GCC) countries—Saudi Arabia, Kuwait, Bahrain, Qatar, Oman, and the UAE. Notably, 20 of these banks are Islamic.
The findings reveal a significant relationship between the fintech index and the performance of banks in Arab emerging markets. However, the relationship between the fintech index and bank profitability is not uniformly strong across the surveyed countries.
Future research should aim to identify key fintech indicators that are applicable across all emerging markets. Additional studies are needed to explore the intersection of fintech and the COVID-19 pandemic, as well as its effects on bank profitability. Researchers are encouraged to apply fintech indicators to sectors beyond banking to assess broader impacts and to investigate the influence of fintech on bank profitability in different emerging economies.