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The Impact of FinTech on the Financial Performance of Commercial Banks in Bangladesh: A Random-Effect Model Analysis

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  • Iftekhar Ahmed Robin

    (Central Bank of Bangladesh, Motijheel, Dhaka 1000, Bangladesh)

  • Mohammad Mazharul Islam

    (Finance Department, College of Business, King Abdulaziz University, Rabigh 21911, Saudi Arabia)

  • Majed Alharthi

    (Finance Department, College of Business, King Abdulaziz University, Rabigh 21911, Saudi Arabia)

Abstract

This paper examines the impact of agent banking activities, a recent FinTech development, influencing the profitability and financial outcomes of commercial banks operating in Bangladesh, as agent banking has been receiving significant global attention due to its technology-driven approach, cost-effectiveness and easy accessibility, and broader coverage of the unbanked population. Through the application of penal data regression methods, the study estimates a random-effect model using panel data comprising quarterly observations from nine Bangladeshi commercial banks that maintained uninterrupted agent banking activities, covering both deposit mobilization and lending during the period from 2018Q1 to 2024Q4. The empirical findings indicate that credit disbursement by agent banks has a positive and statistically significant impact on bank profitability measures, return on assets (ROA), and return on equity (ROE). Similarly, the expansion of agent banking outlets positively and significantly influences ROA. Therefore, an appropriate agent banking policy aimed at increasing agent banking outlets using digital platforms based on FinTech is vital for ensuring positive growth in credit disbursement to achieve improved financial outcomes for the banking sector in a developing country like Bangladesh.

Suggested Citation

  • Iftekhar Ahmed Robin & Mohammad Mazharul Islam & Majed Alharthi, 2025. "The Impact of FinTech on the Financial Performance of Commercial Banks in Bangladesh: A Random-Effect Model Analysis," FinTech, MDPI, vol. 4(3), pages 1-17, August.
    • Handle: RePEc:gam:jfinte:v:4:y:2025:i:3:p:40-:d:1719494
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    References listed on IDEAS

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