Impact of FinTech Growth on Bank Performance in GCC Region

Abstract

This article investigates the effect of financial technology (FinTech) growth on bank performance in the Gulf Cooperation Council (GCC) region. The application is conducted on a panel dataset containing annual observations of banks from 2012 to 2021 using the generalized method of moments (GMM) method. FinTech growth is set as an explanatory variable on three proxies of bank performance, namely, return on assets (ROA), return on equity (ROE), and net interest margin (NIM). Moreover, several control variables are added to the model, including bank-specific and macroeconomic variables. The results are significant as all the proxies of bank performance are negatively affected by the growth of FinTech startups. Consequently, banks are urged to proactively invest in FinTech startups and engage in partnerships to avoid the risk of disruption. JEL Codes: G21, G23, O31