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Corporate Governance and FinTech Innovation: Evidence from Saudi Banks

Author

Listed:
  • Ayth I. Almubarak

    (Accounting Department, Business School, King Faisal University, Al-Ahsa 31982, Saudi Arabia)

  • Abdullah A. Aljughaiman

    (Finance Department, Business School, King Faisal University, Al-Ahsa 31982, Saudi Arabia)

Abstract

The rising adoption of FinTech is changing the financial sector. However, the determinants of FinTech have not been examined thoroughly. The purpose of this paper is to examine whether corporate governance is related to FinTech products in the banking sector, given that governance may influence the quantity and quality of innovation. Specifically, we investigate the association between the size of the board of directors, the percentage of independent directors on the board and FinTech services. Furthermore, we show how the composition of the board can influence the association between FinTech services and a bank’s performance. Using a sample of 12 Saudi banks for the period 2014–2019, we find that board size is significantly and negatively associated with a bank’s FinTech score. We further show that independent members on the board contribute to performance by bringing more FinTech services (innovation development) to the banks. As the first study examining the determinants of FinTech in the Saudi banking sector, this paper may help regulators to better understand the drivers of FinTech and its quality in the banking sector.

Suggested Citation

  • Ayth I. Almubarak & Abdullah A. Aljughaiman, 2024. "Corporate Governance and FinTech Innovation: Evidence from Saudi Banks," JRFM, MDPI, vol. 17(2), pages 1-12, January.
    • Handle: RePEc:gam:jjrfmx:v:17:y:2024:i:2:p:48-:d:1327328
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    References listed on IDEAS

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    3. Dur Almulla & Abdullah A. Aljughaiman & Vassilios Papavassiliou, 2021. "Does financial technology matter? Evidence from an alternative banking system," Cogent Economics & Finance, Taylor & Francis Journals, vol. 9(1), pages 1934978-193, January.
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