Abstract:
E-Banking is a form of IT application that serve customers when doing transactions using their personal accounts by computer or mobile phone that is connected to the internet, therefore noncash transactions applied. This research aims to analyze the relationship between the application of two major fintech E-bank innovations and loan provision and credit risk for 56 banks out of 19 countries. The data used is sourced mostly from Eikon and the Worldbank and covers data from 1992-2019. As the dependent variables, loan provision is denoted in Total loans, and credit risk is denoted as the ratio of non-performing loans to total loans and the loans to asset ratio. The independent variables are Internet Banking and Mobile Banking applications which are measured using a dummy and early adopters of both technologies which is also measured with a dummy. This study uses bank and country specific control variables and also controls for crises and differences between developing and developed countries. The data analysis technique used are event studies, fixed effects and random effects panel models. The results of the event study indicate that: (1) internet banking and mobile banking applications causes a positive significant effect in the increase of loan provision, (2) internet banking and mobile banking applications do not have any effect on credit risk ratios. The results of the panel regressions of internet banking show that (1) early adopters of internet banking do not issue more loans compared to late adopters, (2) early adopters of internet banking do not have different credit risk ratios compared to late adopters. The results of the panel regressions of mobile banking applications show that (1) early adopters of mobile banking application do issue more loans compared to late adopters, (2) early adopters of internet banking do not have different credit risk ratios compared to late adopters.
