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Unraveling the Profitability Puzzle: A Comprehensive Analysis of Banks' IT Adoption in Southeast and Central Europe

Author

Listed:
  • Ajtene Avdullahi
  • Esat A. Durguti
  • Bese Sadikaj
  • Milaim Mehmeti

Abstract

The purpose of this research paper is to investigate the impact of commercial bank branches (CBBs), automated teller machines (ATMs), the number of debit cards (NDCs), and the number of credit cards (NCCs) on Banks Profitability (BP) in terms of Return on Assets (ROA) and Return on Equity (ROE). The sample used for this research covers the years 2017-2022, respectively 108 yearly observations with a particular emphasis on the eighteen Southeast and Central European countries (SCE). The current research employed panel data, with the econometric strategy that combines ordinary least squares (OLS) and generalized methods of moments (GMM) to examine the premise. The findings indicate that NDCs and ATMs have a negative statistical influence on BP, whereas CBBs and NCCs have positive influences, based on the static approach. Additionally, results obtained from the dynamic GMM approach indicate that ATMs, CBBs, and NCCs positively impact BP, whereas NDCs have the opposite effect. From the perspective of originality and scientific contribution, the research is considered unique in the inclusion of variables and countries in the analysis.

Suggested Citation

  • Ajtene Avdullahi & Esat A. Durguti & Bese Sadikaj & Milaim Mehmeti, 2025. "Unraveling the Profitability Puzzle: A Comprehensive Analysis of Banks' IT Adoption in Southeast and Central Europe," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 19-35.
    • Handle: RePEc:bas:econst:y:2025:i:4:p:19-35
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    More about this item

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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