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The Relationship Between Digital Banking and Financial Performance: A Study on Deposit Banks and Participation Banks in Türkiye

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  • Coşkun Ataol

    (Istanbul Ticaret University)

  • Hicabi Ersoy

    (İstanbul Ticaret University)

Abstract

Financial technology turned digital banking to a fundamental service channel for banks through internet and mobile technologies. This study examines the impact of digital banking on the financial performance of deposit and participation banks in Türkiye. Using annual data from 2014 to 2024 for 13 banks, a panel data model is applied. Financial performance is assessed through asset growth, return on assets (ROA), and return on equity (ROE), while digitalization is proxied by the number of active digital banking customers, credit cards, and POS member merchants. Control variables include the cost-to-income ratio, the share of banking service revenues in total income, and personnel expenses per employee. Bank-specific characteristics such as size, ownership, and business model are accounted for using dummy variables. The empirical results indicate that digital banking activities are significantly associated with improved financial performance, whereas the influence of dummy varilables (which represent structural bank characteristics is found to be limited.

Suggested Citation

  • Coşkun Ataol & Hicabi Ersoy, 2026. "The Relationship Between Digital Banking and Financial Performance: A Study on Deposit Banks and Participation Banks in Türkiye," Journal of Finance Letters (Maliye ve Finans Yazıları), Maliye ve Finans Yazıları Yayıncılık Ltd. Şti., vol. 41(125), pages 50-71, April.
    • Handle: RePEc:acc:malfin:v:41:y:2026:i:125:p:50-71
    DOI: https://doi.org/10.33203/mfy.1738365
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