IDEAS home Printed from https://ideas.repec.org/a/gam/jfinte/v2y2023i1p8-119d1077657.html
   My bibliography  Save this article

The Effect of Business Intelligence on Bank Operational Efficiency and Perceptions of Profitability

Author

Listed:
  • Md. Mominur Rahman

    (Department of Business Administration, Northern University Bangladesh (NUB), Dhaka 1230, Bangladesh)

Abstract

The purpose of the study is to examine the effects of business intelligence on the bank’s operational efficiency and perceptions of profitability. The study is based on 259 responses from 27 branches of a commercial bank, employing a simple random sampling technique. This research uses the partial least square- structural equation method (PLS-SEM) method to test the hypotheses. The study verifies construct’s reliability and construct’s validity of the measurement model, and tests the fitness of the structural model. The study finds that business intelligence is positively associated with operational efficiency and profitability. Further, the study reveals that operational efficiency through business intelligence positively affects bank’s profitability. Based on competitive theory, this research states that business intelligence allows the productive entity to generate superior margins compared to its market rivals. Thus, banks can offer better options more cheaply than their rivals and thereby ensure competitive advantage. Further, based on resource-based view theory, the study argues that business intelligence as a strategic resource can provide the foundation to develop bank capabilities that can lead to superior performance over time. Therefore, the study implies business intelligence application in the banking companies and helps decision-making effectiveness for the management body of banks, academics, and policymakers.

Suggested Citation

  • Md. Mominur Rahman, 2023. "The Effect of Business Intelligence on Bank Operational Efficiency and Perceptions of Profitability," FinTech, MDPI, vol. 2(1), pages 1-21, February.
    • Handle: RePEc:gam:jfinte:v:2:y:2023:i:1:p:8-119:d:1077657
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2674-1032/2/1/8/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2674-1032/2/1/8/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Elbashir, Mohamed Z. & Collier, Philip A. & Davern, Michael J., 2008. "Measuring the effects of business intelligence systems: The relationship between business process and organizational performance," International Journal of Accounting Information Systems, Elsevier, vol. 9(3), pages 135-153.
    2. Jesmin Akhter & Kun Cheng, 2020. "Sustainable Empowerment Initiatives among Rural Women through Microcredit Borrowings in Bangladesh," Sustainability, MDPI, vol. 12(6), pages 1-19, March.
    3. Bram Pieket Weeserik & Marco Spruit, 2018. "Improving Operational Risk Management Using Business Performance Management Technologies," Sustainability, MDPI, vol. 10(3), pages 1-20, February.
    4. Md. Mominur Rahman & Bilkis Akhter, 2021. "The impact of investment in human capital on bank performance: evidence from Bangladesh," Future Business Journal, Springer, vol. 7(1), pages 1-13, December.
    5. Sarstedt, Marko & Hair, Joseph F. & Cheah, Jun-Hwa & Becker, Jan-Michael & Ringle, Christian M., 2019. "How to specify, estimate, and validate higher-order constructs in PLS-SEM," Australasian marketing journal, Elsevier, vol. 27(3), pages 197-211.
    6. Franklin Allen & Xian Gu & Julapa Jagtiani, 2021. "A Survey of Fintech Research and Policy Discussion," Review of Corporate Finance, now publishers, vol. 1(3-4), pages 259-339, July.
    7. Acharya, Viral & Engle, Robert & Steffen, Sascha, 2021. "Why did bank stocks crash during COVID-19?," CEPR Discussion Papers 15901, C.E.P.R. Discussion Papers.
    8. Elnahass, Marwa & Trinh, Vu Quang & Li, Teng, 2021. "Global banking stability in the shadow of Covid-19 outbreak," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 72(C).
    9. Sarstedt, Marko & Ringle, Christian M. & Smith, Donna & Reams, Russell & Hair, Joseph F., 2014. "Partial least squares structural equation modeling (PLS-SEM): A useful tool for family business researchers," Journal of Family Business Strategy, Elsevier, vol. 5(1), pages 105-115.
    10. Cook, Wade D. & Hababou, Moez, 2001. "Sales performance measurement in bank branches," Omega, Elsevier, vol. 29(4), pages 299-307, August.
    11. Bitar, Mohammad & Pukthuanthong, Kuntara & Walker, Thomas, 2018. "The effect of capital ratios on the risk, efficiency and profitability of banks: Evidence from OECD countries," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 53(C), pages 227-262.
    12. Fethi, Meryem Duygun & Pasiouras, Fotios, 2010. "Assessing bank efficiency and performance with operational research and artificial intelligence techniques: A survey," European Journal of Operational Research, Elsevier, vol. 204(2), pages 189-198, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Maria Elisabete Duarte Neves & Maria Do Castelo Gouveia & Catarina Alexandra Neves Proença, 2020. "European Bank’s Performance and Efficiency," JRFM, MDPI, vol. 13(4), pages 1-17, April.
    2. Nik Masdek Nik Rozana & Wong Kelly Kai Seng & Mohd Nawi Nolila & Sharifuddin Juwaidah & Wong Wang Li, 2023. "Antecedents of sustainable food waste management behaviour: Empirical evidence from urban households in Malaysia," Management & Marketing, Sciendo, vol. 18(1), pages 53-77, March.
    3. Rosita Capurro & Michele Galeotti & Stefano Garzella, 2018. ""Mondo reale-tradizionale" e "mondo digitale", strategie aziendali e web intelligence: il futuro del controllo e della gestione delle informazioni," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2018(2 Suppl.), pages 83-111.
    4. Marie Kris Giango & Rodel Hintapan & Michael Suson & Ivy Batican & Looverville Quiño & Ludimie Capuyan & Jose Marie Anoos & Jannen Batoon & Joerabell Lourdes Aro & Fatima Maturan & Kafferine Yamagishi, 2022. "Local Support on Sports Tourism Development: An Integration of Emotional Solidarity and Social Exchange Theory," Sustainability, MDPI, vol. 14(19), pages 1-26, October.
    5. Zia Ullah & Susana Álvarez-Otero & Mohammed Ali Bait Ali Sulaiman & Muhammad Safdar Sial & Naveed Ahmad & Miklas Scholz & Khaoula Omhand, 2021. "Achieving Organizational Social Sustainability through Electronic Performance Appraisal Systems: The Moderating Influence of Transformational Leadership," Sustainability, MDPI, vol. 13(10), pages 1-14, May.
    6. Changchun Zhu & Jianguo Du & Fakhar Shahzad & Muhammad Umair Wattoo, 2022. "Environment Sustainability Is a Corporate Social Responsibility: Measuring the Nexus between Sustainable Supply Chain Management, Big Data Analytics Capabilities, and Organizational Performance," Sustainability, MDPI, vol. 14(6), pages 1-20, March.
    7. Abdulmajeed Azyabi & Waldemar Karwowski & Peter Hancock & Thomas T. H. Wan & Ahmad Elshennawy, 2022. "Assessing Patient Safety Culture in United States Hospitals," IJERPH, MDPI, vol. 19(4), pages 1-15, February.
    8. Fakhar Shahzad & Jianguo Du & Imran Khan & Adnan Fateh & Muhammad Shahbaz & Adnan Abbas & Muhammad Umair Wattoo, 2020. "Perceived Threat of COVID-19 Contagion and Frontline Paramedics’ Agonistic Behaviour: Employing a Stressor–Strain–Outcome Perspective," IJERPH, MDPI, vol. 17(14), pages 1-22, July.
    9. Cao, Ting & Cook, Wade D. & Kristal, M. Murat, 2022. "Has the technological investment been worth it? Assessing the aggregate efficiency of non-homogeneous bank holding companies in the digital age," Technological Forecasting and Social Change, Elsevier, vol. 178(C).
    10. Thomas Dolmark & Osama Sohaib & Ghassan Beydoun & Kai Wu, 2021. "The Effect of Individual’s Technological Belief and Usage on Their Absorptive Capacity towards Their Learning Behaviour in Learning Environment," Sustainability, MDPI, vol. 13(2), pages 1-17, January.
    11. Ray, Subhash, 2016. "Cost efficiency in an Indian bank branch network: A centralized resource allocation model," Omega, Elsevier, vol. 65(C), pages 69-81.
    12. Jiatong Yu & Taesoo Moon, 2021. "Impact of Digital Strategic Orientation on Organizational Performance through Digital Competence," Sustainability, MDPI, vol. 13(17), pages 1-15, August.
    13. Sabri Boubaker & Duc Trung Do & Helmi Hammami & Kim Cuong Ly, 2022. "The role of bank affiliation in bank efficiency: a fuzzy multi-objective data envelopment analysis approach," Annals of Operations Research, Springer, vol. 311(2), pages 611-639, April.
    14. Mai, Nhat Chi, 2015. "Efficiency of the banking system in Vietnam under financial liberalization," OSF Preprints qsf6d, Center for Open Science.
    15. Scott C. Manley & Joseph F. Hair & Ralph I. Williams & William C. McDowell, 2021. "Essential new PLS-SEM analysis methods for your entrepreneurship analytical toolbox," International Entrepreneurship and Management Journal, Springer, vol. 17(4), pages 1805-1825, December.
    16. Marwa Elnahass & Mohamed Marie & Mohammed Elgammal, 2022. "Terrorist attacks and bank financial stability: evidence from MENA economies," Review of Quantitative Finance and Accounting, Springer, vol. 59(1), pages 383-427, July.
    17. Liu, John S. & Lu, Louis Y.Y. & Lu, Wen-Min, 2016. "Research fronts in data envelopment analysis," Omega, Elsevier, vol. 58(C), pages 33-45.
    18. Ooi, Keng-Boon & Lee, Voon-Hsien & Hew, Jun-Jie & Leong, Lai-Ying & Tan, Garry Wei-Han & Lim, Ai-Fen, 2023. "Social media influencers: An effective marketing approach?," Journal of Business Research, Elsevier, vol. 160(C).
    19. Anyars Mahmud, 2022. "Impact of Bank Regulations on Banks' Profitability: Cross-Country Evidence," European Journal of Business Science and Technology, Mendel University in Brno, Faculty of Business and Economics, vol. 8(2), pages 217-232.
    20. Laguir, Issam & Stekelorum, Rébecca & El Baz, Jamal, 2021. "Proactive environmental strategy and performances of third party logistics providers (TPLs): Investigating the role of eco-control systems," International Journal of Production Economics, Elsevier, vol. 240(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jfinte:v:2:y:2023:i:1:p:8-119:d:1077657. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.