Fintech Adoption and Banks’ Non-Financial Performance: Do Circular Economy Practices Matter?

Abstract

This study draws insights from practice-based view theory (PBV) to investigate the impact of fintech adoption (FA) on the non-financial performance (NFP) of banking institutions in developing countries, considering the mediating role of circular economy practices (CEPs). A structured questionnaire was distributed to collect primary data from banks’ staff in Iraq, Egypt, Oman, and Jordan using a convenience sampling method with a sample size of 397. Subsequently, the structural equation model was utilized to test the research hypotheses of the proposed conceptual model. The study’s findings revealed that FA positively and significantly impacts CEPs and banks’ NFP (customer satisfaction, internal processes, and learning and growth perspectives). Moreover, CEPs mediate the relationship between FA and banks’ NFP in a positive and significant way. Given the dearth of the literature, this is the first study to fill the research gaps by investigating the impact of FA on the NFP of banking institutions in developing countries, considering CEPs as a mediator, and yielding critical theoretical and practical implications. The study’s findings provide banks’ managers with valuable insights about how to enhance their NFP through FA and CEPs during and after crises and support policymakers and regulators in developing a legislative framework that guides banks to invest in CE models and provides reward systems to encourage them.