The effect of financial technology on commercial banks’ stability in Sub-Sahara Africa

Authors

  • Ngong Kelvin Sam Department of Banking and Finance, Faculty of Evonomics and Management Sciences, the University of Bamenda
  • Jumbo Urie Eleazar Professor of Economics and Deputy Director of the Higher Institute of Commerce and Management (HICM), the University of Bamenda-Cameroon
  • Achamoh Victalice Ngimanang Doctor of Banking & Financial Economics and Head of Department of Economics Science in the Higher Technical Teacher Training College (HTTTC), the University of Bamenda, Cameroon

Keywords:

ATMs, Commercial banks, Commercial banks stability, Credit card, Debit card, Financial technology, Internet and mobile banking

Abstract

The swift progression of digital technology is revolutionizing the financial domain and significantly influencing the stability of commercial banks through their pursuit of operational efficiency, reach, service delivery, and increased client attention, enhanced by increased consumer convenience, satisfaction, and loyalty. A complex change indeed as it is often associated with complications related to cyber-attacks which result in among other factors; data breaches, theft of sensitive customer information, and systems disruptions. This explains why the study is designed to investigate the effect of financial technology on commercial banks’ stability in Sub-Sahara Africa. Panel data from 2010 to 2022 was collected for 22 commercial banking sectors from the World Bank Global Financial Development Database 2022 and Financial Access Survey 2022. A composite index was formed to capture financial technology and the banking Z-score was used to capture commercial bank's stability, all driven by data availability. The estimation technique used was the Panel-Corrected Standard Errors (PCSE). The results showed a positive and significant effect of financial technology on commercial banks’ stability at 1%. To improve their stability, commercial banks should invest more in ATMs, credit and debit card infrastructures, and mobile and internet applications, and policymakers should also encourage the development of financial technology (fintech) companies by creating 4G mobile networks, and rural electrifications, to guarantee equitable network and power supply.

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Published

2024-08-16

Issue

Section

Articles