Empirical Analysis on the Impact of Financial Technology at the Financial System, Bank Age and Size, GDP and Inflation towards the Performance of Commercial Banks in Malaysia, From 2004 to 2023

This study examined the impact of financial technology (fintech) on the performance of commercial banks in Malaysia. It evaluated the profitability of commercial banks, specifically looking at return on equity (ROE), after integrating fintech into daily banking operations. The research framework included ROE as the dependent variable, with fintech application, bank size, and bank age as independent variables, while Gross Domestic Product (GDP) and inflation were controlled variables. To conduct the analysis, quantitative methods were employed using secondary data from the financial reports of individual commercial banks between 2004 and 2023. A sample of eight local banks was selected, and the data were gathered from their financial statements over this period. Statistical software such as Stata was utilized to analyse the data. A key focus of this study was the application of financial technology, which was assessed using the Digital Innovation Index. To assess the effects of fintech application, bank size and age, GDP and inflation towards the bank performance, panel data analysis was applied. The analysis process began with unit root tests, followed by the diagnostic tests, including checks for autocorrelation, normality, stability, heteroskedasticity, and multicollinearity to ensure the reliability and validity of the model. The results indicated that financial technology, bank size, and GDP positively and significantly influenced the performance of commercial banks, while bank age and inflation were found to have no significant impact.

financial technology, digital innovation index, performance

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