THE IMPACT OF FINANCIAL TECHNOLOGY ON BANK PERFORMANCE IN ARABIAN COUNTRIES

Banking operations have always evolved in tandem with developing technologies in all fields, providing new services to customers and facilitating easier banking transactions. Many banks have adopted modern financial technology, which has immensely impacted their financial performance, often linked to their operation markets and client bases. This study aims to examine the relationship between financial technology and bank performance using panel data for 21 Arabian banks, from Bahrain, Jordan, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates, from 2015 to 2022. Financial technology was determined by the frequency with which digitalization terminology appeared in annual reports. Bank performance is measured by return on assets and return on equity. Ordinary least squares and two-stage least squares were applied to achieve the objective. The findings reveal that financial technology positively impacts the return on assets for Arabian banks, where a one-unit increase in fintech causes a 0.37 increase in ROA. In addition, financial technology positively impacts return on equity for Arabian banks, where a one-unit increase in fintech leads to a 0.29 increase in ROE. To confirm the study results, robustness was examined for the regression results using sub-period analysis before and during COVID-19. The results obtained using the two sub-periods show that financial technology positively impacts banks' financial performance in the two sub-periods before and during COVID-19. In addition, financial technology's impact on financial performance in model 1 and model 2 during COVID-19 (0.78 and 0.47) is higher than its impact before COVID-19 (0.49 and 28).