The Effect of Internet-Based Financial Resource Mobilization on the Performance of Listed Banks: Emphasizing the Role of Banking Competition

Farshad  Shojaei Abras; Shahriyar Nessabian; Mahmod  Mahmoodzadeh; Mohammad  Mahmoodi

Authors

Farshad Shojaei Abras Department of Finance, Fi.C., Islamic Azad University, Firoozkooh, Iran Author https://orcid.org/0000-0002-0569-0739
Shahriyar Nessabian Department of Economics, CT.C., Islamic Azad University, Tehran, Iran https://orcid.org/0000-0002-0569-0739
Mahmod Mahmoodzadeh Department of Accounting, Fi.C., Islamic Azad University, Firoozkooh, Iran Author https://orcid.org/0000-0002-5844-8604
Mohammad Mahmoodi Department of Accounting, Fi.C., Islamic Azad University, Firoozkooh, Iran Author https://orcid.org/0000-0003-1440-6055

Keywords:

internet-based financial resource mobilization, financial performance, banking competition, internet banking, digital banking

Abstract

The financial performance of banks, as one of the most important indicators for evaluating the success and sustainability of the banking system, has been influenced by various factors, including the intensity of competition, market structure, and modern methods of financial resource mobilization. Moreover, the expansion of internet and digital banking has changed the pattern of resource mobilization, reduced operating costs, expanded remote banking services, and intensified competition among banks. Therefore, examining the relationships among internet-based financial resource mobilization, banking competition, and banks’ financial performance is of considerable importance. The present study aimed to investigate the effect of internet-based financial resource mobilization on the financial performance of banks listed on the Tehran Stock Exchange, with emphasis on the mediating role of banking competition. In terms of purpose, the study was applied, and in terms of methodology, it employed a descriptive-correlational, ex post facto design using panel data. The required data were extracted from audited financial statements, annual reports, explanatory notes, audit reports, information available through the CODAL disclosure system, Central Bank reports, and information related to banks’ internet-based services and transactions. Panel-data regression models and indirect-effect analysis were used to analyze the data and test the hypotheses. The statistical population consisted of banks listed in the Iranian capital market that were active during the study period. The research sample was selected through systematic elimination based on criteria including availability of financial information, continuity of operations, and the feasibility of calculating the study variables. The results of the estimated research models indicated that internet-based financial resource mobilization had a positive and statistically significant effect on banks’ financial performance. Banking competition also had a statistically significant effect on financial performance, and the mediation analysis showed that banking competition transmitted part of the effect of internet-based financial resource mobilization on financial performance. Based on the findings, the development of banks’ internet-based and digital services can not only directly improve financial performance but also enhance efficiency, resource mobilization, and banks’ competitive position by strengthening competition within the banking industry.

References

[1] M. E. C. Monge and D. R. Soriano, "The Role of Digitalization in Business and Management: A Systematic Literature Review," Review of Managerial Science, vol. 18, no. 2, pp. 449-491, 2023, doi: 10.1007/s11846-023-00647-8.

[2] D. Bisht et al., "Imperative Role of Integrating Digitalization in the Firms Finance: A Technological Perspective," Electronics, vol. 11, no. 19, p. 3252, 2022, doi: 10.3390/electronics11193252.

[3] Y. Ma, "The Development of Internet Finance Under the Background of Sharing Economy," Mobile Information Systems, vol. 2022, pp. 1-12, 2022, doi: 10.1155/2022/7298291.

[4] L. Xu, Y. Luo, J. Shi, and L. Liu, "Credit Financing and Channel Encroachment: Analysis of Distribution Choice in a Dual-Channel Supply Chain," Operational Research, vol. 22, no. 4, pp. 3925-3944, 2022, doi: 10.1007/s12351-022-00699-w.

[5] J. Li, "The Influence of the Network on the Financial Market: Taking Financial Intermediaries and Internet Finance as Examples," Advances in Economics Management and Political Sciences, vol. 29, no. 1, pp. 126-132, 2023, doi: 10.54254/2754-1169/29/20231367.

[6] W. B. Jabra, "Digital Finance and Value Creation in Tunisian Banking Sector," International Journal of Research in Finance and Management, vol. 7, no. 1, pp. 38-46, 2024, doi: 10.33545/26175754.2024.v7.i1a.279.

[7] I. Neeka, Z. Sira, E. Ikechukwu, and N. B. Sunday, "Impact of Digital Financing on Organizational Performance: The COVID-19 Lockdown Experience," Global Academic Journal of Economics and Business, vol. 5, no. 03, pp. 38-47, 2023, doi: 10.36348/gajeb.2023.v05i03.001.

[8] Z. Hu and Y. Chen, "Literature Review on the Impact of Internet Finance Development on Commercial Bank Profit Model," Frontiers in Business Economics and Management, vol. 11, no. 1, pp. 101-107, 2023, doi: 10.54097/fbem.v11i1.11822.

[9] A. Huang, "The Influence of Internet Finance on the Performance of Commercial Banks: The Intermediary Effect of Interest Rate Marketization," 2023, doi: 10.4108/eai.26-5-2023.2334306.

[10] X. M. Song, H. Yu, and Z. He, "The Heterogeneous Impact of Fintech on the Profitability of Commercial Banks: Competition and Spillover Effects," 2023, doi: 10.20944/preprints202309.1134.v1.

[11] X. M. Song, H. Yu, and Z. He, "Heterogeneous Impact of Fintech on the Profitability of Commercial Banks: Competition and Spillover Effects," Journal of Risk and Financial Management, vol. 16, no. 11, p. 471, 2023, doi: 10.3390/jrfm16110471.

[12] K. Waliszewski et al., "Digital Loans and Buy Now Pay Later From LendTech Versus Bank Loans in the Era of ‘Black Swans’: Complementarity in the Area of Consumer Financing," Equilibrium Quarterly Journal of Economics and Economic Policy, vol. 19, no. 1, pp. 241-278, 2024, doi: 10.24136/eq.2982.

[13] S. Ramakrishnan, S. Joghee, S. Kabiraj, and M. M. Bishnoi, "Fintech Innovations in the Financial Service Industry," Journal of Risk and Financial Management, vol. 15, no. 7, p. 287, 2022, doi: 10.3390/jrfm15070287.

[14] C. Yang, L. Chen, Q. Li, and J. Wu, "Digitalization of Banks and Inclusive Finance: New Insights From Cultural Industry's Financing Constraints," Financial Review, vol. 60, no. 1, pp. 71-93, 2024, doi: 10.1111/fire.12404.

[15] X. N. Wang, Y. Tang, and A. G. Quaranta, "Machine Learning-Driven Lending Decisions in Bank Consumer Finance," International Journal of Information Systems and Supply Chain Management, vol. 17, no. 1, pp. 1-19, 2024, doi: 10.4018/ijisscm.348337.

[16] B. Chen, X. Yang, and Z. Ma, "Fintech and Financial Risks of Systemically Important Commercial Banks in China: An Inverted U-Shaped Relationship," Sustainability, vol. 14, no. 10, p. 5912, 2022, doi: 10.3390/su14105912.

[17] N. Mansour, "Digital Finance and Commercial Banks' Risk," International Journal of E-Business Research, vol. 20, no. 1, pp. 1-22, 2024, doi: 10.4018/ijebr.344418.

[18] Y. Zhao, "Risk Prediction for Internet Financial Enterprises by Deep Learning Algorithm and Sustainable Development of Business Transformation," Journal of Global Information Management, vol. 30, no. 7, pp. 1-16, 2022, doi: 10.4018/jgim.300741.

[19] C. Liu, T. Dong, and L. Meng, "The Prevention of Financial Legal Risks of B2B E‐commerce Supply Chain," Wireless Communications and Mobile Computing, vol. 2022, no. 1, 2022, doi: 10.1155/2022/6154011.

[20] H. P. and C. Wu, "The Impact and Role of Internet Finance on Non-Performing Loans: An Empirical Analysis of 18 Major Commercial Banks," 2023, doi: 10.4108/eai.1-9-2023.2338773.

[21] J. Xin, "Study on the Dynamics of Financial and Economic Correlation Network of Banks in Implementing Digital Transformation With Precise Policies," Financial Engineering and Risk Management, vol. 6, no. 7, 2023, doi: 10.23977/ferm.2023.060710.

[22] M. Yu and A. Yan, "Can Digital Finance Accelerate the Digital Transformation of Companies? From the Perspective of M&A," Sustainability, vol. 14, no. 21, p. 14281, 2022, doi: 10.3390/su142114281.

[23] W. Yang, C. C. Chu, J. Yang, and X. Ye, "The Impact of Internet Finance on the Profit Efficiency of Commercial Banks: Theory and Evidence From China," Sage Open, vol. 13, no. 1, 2023, doi: 10.1177/21582440231158050.

[24] Α. Δασίλας and G. Karanović, "The Impact of Internet Finance on Bank Profitability. Evidence From the Chinese Commercial Banks," Journal of Accounting and Management Information Systems, vol. 22, no. 4, 2023, doi: 10.24818/jamis.2023.04001.

[25] S. K. Sharma, P. V. Ilavarasan, and S. Karanasios, "Small Businesses and FinTech: A Systematic Review and Future Directions," Electronic Commerce Research, vol. 24, no. 1, pp. 535-575, 2023, doi: 10.1007/s10660-023-09705-5.

[26] Y. Xu, "The Strategy of How to Deeply Integrate Technology and Finance in the Internet Environment," Journal of Environmental and Public Health, vol. 2022, no. 1, 2022, doi: 10.1155/2022/5018160.

[27] M. Nisa and M. I. Sunni, "Internet Users and Macroeconomic Factors' Impact on Indonesia-Malaysia Islamic Finance Index," Jurnal Ekonomi Dan Bisnis Islam (Journal of Islamic Economics and Business), vol. 10, no. 1, pp. 115-138, 2024, doi: 10.20473/jebis.v10i1.48772.