The Impact of Technological Innovations on Bank Performance in Emerging Economies

Abstract

On a global scale, technological innovations have achieved great success in the process of economic development of national economies, especially in the banking sector. Technological innovation is largely used by the banking sector to create competitive intelligence and competitive advantage, as it helps banks improve their services and cost efficiency, as fewer employees and fewer traditional branches are needed. However, this current study focused on examining the impact of technological innovation on bank performance in 40 emerging markets from 2000 to 2021. Findings from the correlation results show that there are strong positive correlations between technological innovation and bank performance in emerging markets. Similarly, we also find the existence of cointegration between technological innovation and bank performance and the existence of a long-run relationship between technological innovation and bank performance in emerging markets, as implied by the results of tied tests. Our study also found from ARDL and GMM results that there are long-term significant relationships between technological innovation and emerging market bank performance. After making these discoveries, we recommended policies such as improving the technology hub of emerging markets and extending banking services to emerging markets' underbanked populations living in remote areas using technology tools to improve bank performance in emerging markets.