The Impact of Electronic Banking on the Financial Efficiency of Iranian Banks under Multi-layered and Prolonged Crisis Conditions

Document Type : Original Article

Authors

1 PhD student in Accounting, Department of Accounting and Finance, Faculty of Economics and Management, Urmia University, Urmia, Iran.

2 Associate Professor, Department of Finance and Banking, Faculty of Management and Accounting, Allameh Tabatabaei University, Tehran, Iran.

Abstract

Objective: Over the past two decades, digital transformation has profoundly reshaped banking systems, positioning electronic banking as a key determinant of financial efficiency. While prior empirical evidence largely focuses on stable and developed economies, limited attention has been given to how this relationship operates under multilayered and persistent crisis conditions, particularly in developing countries. This study examines the impact of electronic banking on the financial efficiency of Iranian banks and investigates the moderating role of enduring and overlapping economic crises.
Methods: The study employs panel data from Iranian banks over the sample period (2011-2025; 14 Years) and applies a stochastic frontier analysis (SFA) framework to estimate financial efficiency and its determinants. A composite index capturing multilayered and enduring crisis conditions is incorporated into the model, along with interaction terms, to assess whether crisis intensity moderates the relationship between electronic banking and financial efficiency.
Results: This research examined the impact of e-banking on the financial efficiency of Iranian banks amidst structural and persistent economic crises. The findings reveal that e-banking generally exerts a positive and significant effect on enhancing financial efficiency, serving as a necessary condition for improving bank performance. However, under persistent crisis conditions, the interaction effect between technology adoption and crises was  found   to be   statistically   insignificant.   This outcome   contrasts   with   numerous international studies that report a technology-enhancing role in bolstering bank resilience when facing short-term shocks (e.g., the 2008 financial crisis or the COVID-19 pandemic). The analyses suggest that in Iran, the structural and long-term nature of crises significantly neutralizes a substantial portion of the potential benefits of technological advancements, preventing e-banking from playing the same supportive role observed in economies with more stable institutional environments. Additionally, other dimensions of the model indicate that the non-performing loan ratio (NPL), bank size, and capital adequacy ratio (CAR) have a significant negative impact on efficiency, whereas private ownership structure exhibits a significant positive influence on banking performance a finding that underscores the greater capability of private banks in leveraging technology and their more competitive operational approach.
Conclusion: The study concludes that while e-banking is essential for the transformation and efficiency of Iran’s banking sector, its full impact necessitates complementary factors such as macroeconomic stability, improved regulatory quality, enhanced risk management, and robust institutional infrastructure. Technology cannot fully realize its amplifying role in the absence of a conducive economic environment and sound governance.
Innovation: The primary novelty of this research lies in providing a localized explanation for the role of technology amidst persistent crises. Unlike prevailing global literature, technology is here conceptualized not as a shield against crises, but as a conditionally effective tool. This study also addresses a gap in domestic research concerning the interplay between technology and crisis conditions. By employing data from the Iranian banking sector, it offers a novel framework for analyzing banking efficiency in volatile economies. This framework can serve as a foundation for future research on technology transmission mechanisms, the role of emerging financial innovations, and the conditions under which digital banking can effectively contribute to the resilience and efficiency of the financial sector.
 

Keywords

References

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History

  • Receive Date: 11 February 2026
  • Revise Date: 09 May 2026
  • Accept Date: 09 May 2026
  • First Publish Date: 22 May 2026
  • Publish Date: 22 May 2026

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