The Impact of FinTech on the Financial Performance of Commercial Banks in Bangladesh: A Random-Effect Model Analysis

Iftekhar Ahmed Robin, Mohammad Mazharul Islam () and Majed Alharthi
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Iftekhar Ahmed Robin: Central Bank of Bangladesh, Motijheel, Dhaka 1000, Bangladesh
Mohammad Mazharul Islam: Finance Department, College of Business, King Abdulaziz University, Rabigh 21911, Saudi Arabia
Majed Alharthi: Finance Department, College of Business, King Abdulaziz University, Rabigh 21911, Saudi Arabia

FinTech, 2025, vol. 4, issue 3, 1-17

Abstract: This paper examines the impact of agent banking activities, a recent FinTech development, influencing the profitability and financial outcomes of commercial banks operating in Bangladesh, as agent banking has been receiving significant global attention due to its technology-driven approach, cost-effectiveness and easy accessibility, and broader coverage of the unbanked population. Through the application of penal data regression methods, the study estimates a random-effect model using panel data comprising quarterly observations from nine Bangladeshi commercial banks that maintained uninterrupted agent banking activities, covering both deposit mobilization and lending during the period from 2018Q1 to 2024Q4. The empirical findings indicate that credit disbursement by agent banks has a positive and statistically significant impact on bank profitability measures, return on assets (ROA), and return on equity (ROE). Similarly, the expansion of agent banking outlets positively and significantly influences ROA. Therefore, an appropriate agent banking policy aimed at increasing agent banking outlets using digital platforms based on FinTech is vital for ensuring positive growth in credit disbursement to achieve improved financial outcomes for the banking sector in a developing country like Bangladesh.

Keywords: FinTech; financial performance; commercial banks; panel data model; credit (search for similar items in EconPapers)
JEL-codes: C6 F3 G O3 (search for similar items in EconPapers)
Date: 2025
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