Mobile Banking and Bank Performance: Do Bank Ownership Types Matter?
In Indonesia, mobile banking users and transactions continue to increase. Regulators and banks anticipate that digitalization will improve banking performance and financial stability. In contrast to technology-based financial services or FinTech, the digitization of banking services in Indonesia is considered somewhat tardy. FinTech, which offers digital services, is a threat to banks. Covering 138 commercial banks in Indonesia from 2004 to 2018, this study investigates the influence of mobile banking on bank performance in Indonesia. Additionally, this study investigates whether bank ownership influences the performance-enhancing effects of mobile banking based on bank ownership. A dynamic panel data analysis approach with a two-step GMM system is used to test the hypothesis. This study finds that mobile banking significantly improves bank profitability and stability in Indonesian banking. These results are more significant for private banks. Moreover, digitalization is crucial in the banking sector, particularly with the adoption of mobile banking because it encourages banks, particularly private banks, to perform better than those that do not use mobile banking. This is the first study investigating the impact of mobile banking on banks' performance and financial stability based on bank ownership in Indonesia.
Keywords: mobile banking, bank ownership, bank profitability, bank stability.
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