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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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Preprints.org
DOI
10.20944/preprints202506.2012.v1

This paper examines the impact of agent banking activities, a recent FinTech development, on the financial performance of commercial banks in Bangladesh, as agent banking has been receiving significant global attention due to its technology driven approach, cost-effective and easy accessibility and broader coverage to the unbanked population. Employing a panel data regression framework, the study estimates a random effect model using the bank-level quarterly data from nine commercial banks in Bangladesh that have been operating full-scale agent banking services including deposit mobilization and credit disbursement over 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 asset (ROA) and return on equity (ROE). Similarly, the number of agent banking outlets has a significant positive impact on 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 in order to improve the financial performance of the banking sector in a developing country like Bangladesh.

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