The IUP Journal of Bank Management
Impact of Digital Transformation on Banks' Profitability and Liquidity in Emerging Markets: Evidence from Egypt

Article Details
Pub. Date : Feb, 2023
Product Name : The IUP Journal of Bank Management
Product Type : Article
Product Code : IJBM010223
Author Name : Emad Sayed and Karim Mansour
Availability : YES
Subject/Domain : Finance
Download Format : PDF Format
No. of Pages : 25



This study explores the effect of Digital Transformation (DT) on banks' profitability and liquidity in Egypt using a sample of 27 Egyptian banks for the period 2014 to 2021. The study uses the Generalized Method of Moment (GMM) estimator developed for dynamic panel data. The results reveal that DT has a positive effect on Egyptian banks' profitability and liquidity. Also, it is found that the Covid-19 pandemic diluted the positive effect of DT on banks' profitability. Going by resource-based theory, it adds evidence to the literature on financial technology. The study is the first in emerging countries that contributes to preparing the DT index in Egyptian banking. It would be of help to managers and stakeholders in realizing the role of DT in enhancing bank performance, and in understanding the implications of Covid-19 for the future of banking services, especially in emerging markets. The findings would help policymakers realize the importance of DT for Egypt's Vision 2030, as it involves establishing a strong digital economy and enhancing financial inclusion.


Digital Transformation (DT) of banks in Egypt is a major challenge in the context of its Vision 2030. The DT goals include developing Information and Communications Technology (ICT) infrastructure, establishing a strong digital economy, promoting digital inclusion, securing digital rights, achieving financial inclusion, building capacity and fostering innovation, combating corruption, ensuring information security, and enhancing Egypt's regional and international standing.

At present, the service industry is concentrating on automating its transactions using modern technical applications. In particular, banks play a prominent role in growing a country's economy.