Impact of branchless banking on banks performance: Quarterly review of Pakistani banks

Branchless banking has become quite popular everywhere. It has, no doubt, expanded the market of financial institutions. However, its further expansion depends on its impact on the performance of banks. Previous studies have mainly highlighted the impact of branchless banking on the performance of banks using the data for other countries and their results have been mixed. To investigate this, the impact of branchless banking on banks’ performance and on core banking in the case of Pakistan is examined. For this purpose, data of 5 commercial banks for pre and post periods of branchless banking and data of banks doing only branch banking with that of doing both has been collected. The univariate and multivariate analyses have been carried out on the collected data. In univariate and multivariate analysis, the performance and core banking indicators have been regressed on branchless banking dummy variables and other control variables such as net interest margin, total deposits to total assets ratio, deposits to equity ratio, advances to total assets ratio and administrative expenses to total earning ratio. The multiple regressions have been estimated both by pooled OLS and fixed effect methods. The findings show that branchless banking has made no significant impact on performance and on the core function of banks but it has somehow changed the volatility of these indicators.