The Effect of Financial Innovation on the Financial Performance of Financial Institutions in Cameroon
DOI:
https://doi.org/10.47941/ijf.1831Keywords:
Financial Innovation, Financial Performance, Depository Financial InstitutionsAbstract
Purpose: The study sought to investigate the effect of financial innovations on financial performance of depository financial institutions in Cameroon. The specif objectives of the study were to examine the effect of product, process and institutional innovation on the financial performance of financial institutions
Methodology: The study adopted a cross sectional research design. Purposive and convenience sampling methods were used to select 210 respondents from 75 financial institutions in Cameroon. Primary data was collected using a self-administered questionnaire. Data collected was sorted, coded and analyzed using the Statistical Package for Social Sciences (SPSS v22.0). Data collected was analysed descriptively with the use of mean and inferentially with the use of ordered logit regression model and Pearson correlation metrix to establish the relationship between the dependent variable and the independent variables and the results were presented in tables.
Findings: The findings show that increased financial innovation through process and institutional innovation can increase financial performances. For the basic regression used to find banks' performance, the analysis indicates that process and product innovation, measured by the ATM, POS, mobile banking and credit card, significantly influences financial performance of financial institutions. Although there is no significant effect of institutional innovation on financial performance, there is still a positive effect.
Unique Contribution to Theory, Policy and Practice: The study therefore recommended that further study can be carried out on the effect of financial innovation on performance of depository financial institutions using different methods. In addition, depository financial institutions should transform banking service by adapting to process innovation so as to increase access to financial services.
Downloads
References
Adair & Berguiga. (2010). Les facteurs dterminants de la performance sociale et de la performance financière des institutions de microfinance dans la rgion MENA : une analyse en coupe instantane. Mondes en dveloppement 2019/1 (n° 185), 91-119. Retrieved from http://regionetdeveloppement.univ-tln.fr/wp-content/uploads/4-Adair-Berguiga.pdf
Adhiambo. (2014). The effects of product innovation on financial performance of commercial banks in Kenya. University of Nairobi. Retrieved from http://hdl.handle.net/11295/75940
Al, La Porta et. (1997). Legal determinants of external finance. The Journal of Finance, 52(3), 1131-1150.
Alemadi. (2021, September 2). Financial Sector, Kuwait Commercial Banks, Financial Sector Growth.
Altunbas et al. (2001). Bank Ownership and Efficiency. ournal of Money, Credit and Banking, 33(4), 926-954. Retrieved from https://doi.org/10.2307/2673929
Ayadi et al. (2012). Regulation of European Banks and Business Models: Towards a New Paradigm. Centre for European Policy Studies. Retrieved from https://ssrn.com/abstrac
Berger, A.N. and Humphrey, D.B. (1997). Efficiency of Financial Institutions: International Survey and Directions for Future Research. European Journal of Operational Research, 98, 175-212. doi:http://dx.doi.org/10.1016/S0377-2217(96)00342-6
Chipeta & Muthinja. (2018). Financial innovations and bank performance in Kenya: Evidence from branchless banking models. South African Journal of Economic and Management Sciences, 21(1). doi:https://doi.org/10.4102/sajems.v21i1.1681
Damanpour. (1996). Organizational Complexity and Innovation: Developing and Testing Multiple Contingency Models. Management Science, 693-716.
Ejigu. (2009). Performance analysis of sample microfinance institutions of Ethiopia. International NGO Journal, 4(5), 287-298.
Fentaw and Thakkar. (2022). The effect of financial innovations on the profitability of private Commercial Banks in Ethiopia. Journal of Positive School Psychology, 6(5), 5928 - 5939.
Francesca & Claeys. (2010). Innovation and performance of European banks adopting Internet. WORKING PAPER SERIES WP 04/10.
Gutirrez-Nieto, B., Serrano-Cinca, C., &Mar, M.C. (2009). Social Efficiency in Microfinance Institutions. Journal of the Operational Research Society, (60).https://doi.org/10.1057/palgrave.jors.2602527
Hauner & Peiris. (2005). Bank Efficiency and Competition in Low-Income Countries: The Case of Uganda. IMF Working Paper No. 05/240,. doi:DOI: 10.5089/9781451862591.001
Hicks, J. (1982). Money, Interest and Wages. Cambridge: Harvard University Press.
Ignazio . (2007). Financial Deepening and Monetary Policy Transmission Mechanism. . BIS Review 124, 28-29.
Kegninkeu, F. T. (2018). The Impact of Credit Risk Management on the Performance of Commercial Banks in Cameroon. Case Study of BICEC Cameroon. Global Journal of Management and Business Research: C Finance, 18(7), 19-28.
Ministary of Finance. (2020). Information Document-Issuance of Fungible Treasury Bonds Through Bids Invitation. Ministary of Finance, 13-14.
Morduch. (1998). Does Microfinance Really Help the Poor? New Evidence from Flagship Programs in Bangladesh. Working Papers 198, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies. Retrieved from https://ideas.repec.org/p/pri/rpdevs/morduch_microfinance_poor.pdf.html
Noyer . (2007). Financial Innovation, Monetary Policy and Financial Stability. Spring Conference of the Bank of France/Deutsche Bundesbank, Eltville, Germany.
OKOTH & MUIA. (2020). The effect of financial innovation on commercial bank's financial performance. International Journal of Interdisciplinary Research and Innovations, 8(1), 163-177.
Ozili. (2017). Bank Profitability and Capital Regulation: Evidence from Listed and non-Listed Banks in Africa. Journal of African Business, 18(2), 143-168. doi:10.1080/15228916.2017.1247329
Qamruzzaman & Wei. (2019). Financial Innovation and Financial Inclusion Nexus in South Asian Countries: Evidence from Symmetric and Asymmetric Panel Investigation. IJFS, 7(4), 1-27. doi: 10.1016/j.techfore.2023.122451
Robert A. Weigand (2016). The performance and risk of banks in the U.S., Europe and Japan post-financial crisis. Investment Management and Financial Innovations, 13(4), 75-94. doi:10.21511/imfi.13(4).2016.07
Rosli & Sidek. (2013). The Impact of Innovation on the Performance of Small and Medium Manufacturing Enterprises: Evidence from Malaysia. Journal of Innovation Management in Small & Medium Enterprise.
Weigand, R. (2013). The Recovery of US Commercial Banking: An Analysis of Revenues, Profits, Dividends, Capital and Value Creation. Banks and Bank Systems 8, No. 3 pp. 76-88.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 Prof. Molem Sama C., Prof Messomo Elle S., Tameta Serge
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution (CC-BY) 4.0 License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
