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Does financial technology matter? Evidence from an alternative banking system

Author

Listed:
  • Dur Almulla
  • Abdullah A. Aljughaiman
  • Vassilios Papavassiliou

Abstract

The purpose of this study is to examine the impact of the financial technology (fintech) services provided by banks on their performance. We also investigate the influence of fintech firms’ growth (as competitor firms) on banks’ financial performance. We extend our analysis to investigate the differences between conventional banks (CBs) and Islamic banks (IBs) in this relationship and utilise a sample of 40 listed banks from Gulf Cooperation Countries, where fintech growth was impressive in the period 2014–2019. We find a negative relationship between fintech services and bank performance for both types of bank. Furthermore, we show that the growth of fintech firms in a country negatively influences CBs’ financial performance but has no significant impact on IBs’ performance. In addition, we test our hypotheses through multiple additional tests and robustness tests, such as the generalised method of moments. The findings could be relevant to banks, policy makers, and academic research.

Suggested Citation

  • 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.
    • Handle: RePEc:taf:oaefxx:v:9:y:2021:i:1:p:1934978
    DOI: 10.1080/23322039.2021.1934978
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    Cited by:

    1. Adey Tarawneh & Aisyah Abdul-Rahman & Syajarul Imna Mohd Amin & Mohd Fahmi Ghazali, 2024. "A Systematic Review of Fintech and Banking Profitability," IJFS, MDPI, vol. 12(1), pages 1-21, January.
    2. 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.

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