The Relationship Between the Internet Banking (EFT) and Financial Performance of Commercial Banks in Pakistan

ABSTRACT

The objective of this study is to investigate the relationship between the usage of online banking and the financial performance of commercial banks in Pakistan over a decade. In recent years, Pakistans financial industry has experienced significant advancements, particularly with the introduction and utilization of online banking, which has led to the implementation of real-time and more efficient financial systems. While the adoption of internet banking is undoubtedly significant, there have been instances where a reverse causal relationship between financial performance and internet banking usage has been observed. This investigation employs a descriptive research methodology. To conduct this study, a sample of the top 15 commercial banks has been selected based on their deposit size as of December 30, 2022. Secondary data from published annual reports of commercial banks and Electronic Funds Transfers settlement reports created by the Pakistan Bankers Organization for each clearing center is utilized. The independent factors in this study include online banking, the size of the bank, and efficiency ratio, whereas the variable that depends is return on capital, which acts as an indicator of the banks financial performance. Linear regressions are used to examine the relationship between both independent and dependent components. According to the studys findings, there is a positive association between internet banking and the financial outcomes of Pakistans commercial financial institutions. Furthermore, the data implies that the independent factors (online banking, size of bank, and efficiency ratio) may explain and forecast commercial bank financial performance in Pakistan.

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