Financial Technology, Innovation, and Bank Performance Nexus: Evidence from ECOWAS Member Countries

Abstract

This study investigates the effect of financial technology and innovation on bank performance in the Economic Commission of West African States from 1997 to 2022. The autoregressive distributed lag technique is applied. Return on asset and return on equity measure bank performance, mobile banking, and internet banking proxy financial technology. Automated teller machines, point of sale, mobile payment, and mobile money proxy financial innovation. The findings reveal a long-term association among the variables and the individual units. The findings specify that financial technology and innovation affect bank performance positively. Investments in financial technologies and innovations in legally controlled banking systems should be encouraged to enhance bank performance. Governments, bank managers, and other stakeholders should efficiently draft and apply policies that safeguard financial technology and innovative investments to stimulate banks performance. Research results on the nexus of financial technology, innovation, and bank performance are inconclusive. The studies provide diverse results which are arguable. Some divulge positive effects, others present negative effects, and others indicate different directions of causality. So, this study is to fill the lacuna.