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Leveraging Artificial Intelligence for Enhanced Bank Profitability: The Role of Technological Innovation

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  • Nourhene Dhahri

Abstract

Purpose: The main aim of this research is to find and understand better the real contribution of AI to financial performance of banks across 20 homogenerous countries. Design/Methodology/Approach: It evaluates three dimensions: the direct impact of AI innovation on performance, the mediating role of information and communication technology (ICT) development, and the moderating influence of economic growth. By relying on longitudinal panel data, the research also captures both short-term and delayed effects of AI adoption, offering insights into its dynamic implications over time. Findings: The empirical findings indicate that while AI technological innovation alone does not have a significant immediate effect on banks’ return on assets, its influence is partially transmitted through improvements in ICT infrastructure. In particular, ICT development mediates the relationship between AI innovation and financial performance, highlighting the crucial role of digital infrastructure in converting technological investments into operational and financial gains. Practical Implications: The research offers a comprehensive perspective on how AI-based innovation can enhance financial performance, support sustainable growth, and reinforce competitiveness within the banking industry. Originality/Value: This work contributes to the existing literature in several ways.

Suggested Citation

  • Nourhene Dhahri, 2025. "Leveraging Artificial Intelligence for Enhanced Bank Profitability: The Role of Technological Innovation," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 92-114.
    • Handle: RePEc:ers:ijebaa:v:xiii:y:2025:i:4:p:92-114
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    References listed on IDEAS

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    1. Anginer, Deniz & Demirguc-Kunt, Asli & Zhu, Min, 2014. "How does competition affect bank systemic risk?," Journal of Financial Intermediation, Elsevier, vol. 23(1), pages 1-26.
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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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