Fintech integration: Driving efficiency in banking institutions across the developing nations

Habib Hussain Khan, Ali M. Kutan and Fiza Qureshi

Finance Research Letters, 2024, vol. 67, issue PA

Abstract: The study investigates the effect of fintech integration on bank efficiency across 59 developing nations from 2010 to 2022. The analysis also considers bank size, capitalization, ownership, competition, and financial sector development. We construct two indicators of fintech integration at the bank level and discover a non-linear relationship between fintech and efficiency. While fintech integration initially hampers bank efficiency, further adoption beyond a certain point enhances it, exhibiting a U-shaped relationship. Moreover, larger, well-capitalized, foreign-owned banks and those operating in more competitive and developed banking sectors exhibit a shallower initial decline in efficiency and a quicker transition to the efficiency-enhancing phase of fintech integration.

Keywords: Fintech integration; Efficiency; Banking institutions; Developing nations (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:67:y:2024:i:pa:s154461232400802x

DOI: 10.1016/j.frl.2024.105772

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