Bank’s Digitalization and Financial Performance during Pandemic in Indonesia

Khairina, Najwa

doi:10.31098/ijebce.v2i1.722

Cited by 6 publications

(7 citation statements)

References 3 publications

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“…Further, Papadopoulos et al (2020) and Mariani and Borghi (2020) argue that digitalization has enabled small-scale firms to respond effectively to the crisis by making use of their dynamic capabilities and financial inclusion. However, the pandemic-led recession period revealed that digital transactions have helped the banking industry to maintain its profit, even though pandemics have to some extent had negative impacts on banks' performance (Khairina, 2022;Lu et al, 2022).…”

Section: Digitalization Of Corporate Financementioning

confidence: 99%

Digitalization of corporate finance and firm performance: global evidence and analysis

Hossain,

Sultana

2024

JFEP

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Purpose As of now, the digitization of corporate finance presents a paradigm shift in business strategy, innovation, financing and managerial capability around the globe. However, the prevailing finance scholarly works hardly document the impact of the digitalization of corporate finance on firm performance with global evidence and analysis. Hence, the contemporary debate on whether firm performance is genuinely stimulated because of the digitalization of corporate finance or not has been a pressing issue in the relevant literature. Therefore, the purpose of this study is to identify a data-driven, concise response to an unaddressed finance issue if the performance of high-digitalized firms (HDFs) outperforms that of their counterpart peers for wealth maximization. Design/methodology/approach The first stage test models examine the firm performance of relatively high-digitalized firms as opposed to low-digitalized firms based on the system GMM. The second stage test of the probabilistic (logit) model infers that the probability of being HDFs explores because of better performance. Then, the authors execute robust checks based on the different quantile regressions and Z-score-based system GMM. In addition, the authors recheck and present the test results of the fixed effect and random effect to capture time-invariant individual heterogeneity. Finally, the supplementary test findings of firms’ credit strength by using Altman five- and four-factor Z-score models are presented. Findings By using cross-country panel analysis as 15 years’ test bed for HDFs and low digitalized firms (LDFs), the test results indicate that the overall firm performance of a digitalized firm is significantly better than that of a non-digitalized firm. The global evidence documents that HDFs are exposed to higher values and are financially more persistent as compared to their counterparts. The finding is remarkably concomitant across several possible subsample analysis, such as country–industry–size–period analysis. Practical implications This study can be remarkably effective in encouraging managers, policymakers and investors to acknowledge the need for adopting the required digitalization. Overall, this original study addresses a core research gap in the corporate finance literature and remarkably provides further direction to rethink the assumptions of firm digitalization on additive value and thereby identify optimal decisions for wealth maximization. The findings also imply that investors require an additional risk premium if they invest in relatively LDFs, which have relatively lower market value and weaker firm performance. Originality/value From an investors point of view, the academic novelty contributes to an innovative and unsettled issue on the impact of digitization of corporate finance on firm performance because there is a new question of high or low digitization of corporate finance in the global market. Hence, this academic novelty contributes to sharing global evidence of the digitalization of corporate finance and its effect on firm performances. In addition, an intensive critical review analysis is conducted based on the most recent and relevant scholarly works published in the top-tier journals of finance and business stream to fix the hypothesis. Overall, this study addresses a core research gap in the corporate finance literature; notably provides further direction to rethink firm digitalization; and thereby identifies optimal decisions for shareholders’ wealth maximization.

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Section: Digitalization Of Corporate Financementioning

confidence: 99%

Digitalization of corporate finance and firm performance: global evidence and analysis

Hossain,

Sultana

2024

JFEP

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“…Based on previous research, digital banking adoption or IT investment positively impacts performance (Kahveci & Wolfs, 2018;Mbama et al, 2018;Wirdiyanti, 2018). Digital banking adoption also effects bank operation and efficiency (Azmi et al, 2020;Islam et al, 2019;Jünger & Mietzner, 2020;Khairina, 2022;Malar et al, 2019;Son et al, 2020;Wadesango, 2020;Wirdiyanti, 2018). However, several researchers believe that digital adoption in the banking industry positively affects the bank's performance.…”

Section: Digital Banking Adoption and Performancementioning

confidence: 99%

The Impact of Digital Banking Adoption, Risk Management and Balanced Scorecard on Indonesian Banking Performance – A Conceptual Paper

Irawan,

Ruhana Isa,

Alfan

2023

AJAP

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Research aim: This research explores the impact of three independent variables, namely digital banking adoption, risk management and balanced scorecard implementation, on bank performance as the dependent variable. Design/ Methodology/ Approach: This paper is a conceptual paper. Previous studies have been extensively focused on ascertaining the determinants of bank performance. Despite the large body of literature in this respect, this article focuses on the role of balanced scorecard implementation in the banking industry. The balanced scorecard’s mediating role is deemed crucial, especially in the banking industry, which is more exposed to the digital and technological revolution. Accordingly, the paper proposes a performance model for banks and financial institutions which combines these determinants. Research finding: The current debate prevalent among researchers and practitioners, as denoted in the literature, is centred on the central argument of how banks can maximise their full potential. This research suggests that the banks’ management employs the following three measures: digital banking adoption, risk management and balanced scorecard implementation as the performance model. In the quest to further improve organisational performance, previous literature lauded balanced scores as a useful management tool. Specifically, the balanced scorecard serves as a strategic planning and performance management tool that utilises financial and non-financial assessments in determining an organisation’s administration, management and operational effectiveness. Practitioner/Policy implication: This study enriches the current state of knowledge in the literature by extending the current understanding of bank performance, especially in relation to digital banking adoption, where the issue of technological and digital matters play a profound role in the banking industry globally due to the rapid advancement in technology. With respect to practical implications, the findings in this study are relatable to the practitioners in the banking industry, whereby the performance model in the study is proposed to offer the ways in which the performance of their respective financial institutions can be improved. Research limitation: In this regard, it is hoped that the paper will shed light on understanding this matter further, especially the role of the balanced scorecard. Specifically, the paper suggests that the balanced scorecard implementation acts as the mediating role that fosters the relationship between digital banking implementation and bank performance. In addition, the balanced scorecard implementation also acts as the factor that mediates the relationship between risk management and bank performance.

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“…The advancement of information and communication technology in the modern era has brought significant changes in various aspects of life, including the financial sector (Khairina, 2022). This technology has enabled people to engage in digital transactions and payments more easily and efficiently.…”

Section: Introductionmentioning

confidence: 99%

What Influences User Preferences in Digital Payment Systems? (A Comparative Analysis of E-Wallet in Indonesia)

Wati,

Soma,

Ispriyahadi

2024

IJEBCE

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This research explores the growing internet usage and rapid advancements in information and communication technology. Indonesia has witnessed increased adoption of digital financial technology, particularly in the form of fintech and digital payment systems. It is crucial to differentiate the characteristics and advantages among Indonesia’s top three e-wallets: GoPay, OVO, and DANA. This study employs a comparative approach to analyze the relationship between user preferences and factors within GoPay, OVO, and DANA e-Wallets in the context of digital payment systems. Using a quantitative research approach and statistical verification. Data analysis employs SEM with the PLS method, involving 150 respondents whose results are compared across the platforms. The study finds that electronic service quality significantly impacts consumer loyalty and satisfaction across all three platforms. In GoPay and OVO, it notably influences satisfaction, but less so in DANA. Customer satisfaction mediate loyalty in GoPay and OVO but not in DANA. Responsiveness is a key component of e-wallet service excellence. Loyalty is influenced by referrals (GoPay and OVO), regular use (DANA), and pricing (DANA), whereas customer satisfaction (GoPay), pricing (DANA), and convenience (OVO) determine contentment. Limiting the study to three variables and three e-wallets may restrict the comprehensiveness of factors affecting consumer satisfaction and loyalty, potentially limiting the generalizability of findings to other digital payment platforms or market contexts. The novelty lies in the direct comparison of investigative outcomes among these three subjects within the context of digital payment systems, selecting high-value study indicators and advancing the prior research.

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Bank’s Digitalization and Financial Performance during Pandemic in Indonesia

Cited by 6 publications

References 3 publications

Digitalization of corporate finance and firm performance: global evidence and analysis

Digitalization of corporate finance and firm performance: global evidence and analysis

The Impact of Digital Banking Adoption, Risk Management and Balanced Scorecard on Indonesian Banking Performance – A Conceptual Paper

What Influences User Preferences in Digital Payment Systems? (A Comparative Analysis of E-Wallet in Indonesia)

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