Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/334152 
Year of Publication: 
2025
Citation: 
[Journal:] Asian Journal of Economics and Banking (AJEB) [ISSN:] 2633-7991 [Volume:] 9 [Issue:] 3 [Year:] 2025 [Pages:] 395-417
Publisher: 
Emerald, Leeds
Abstract: 
The purpose of this research is to reveal the influence of the E-Government Development Index (EGDI), Economic Growth (GDPG) and the Worldwide Governance Indicators (WGI) on the financial performance of commercial banks across ten ASEAN countries. The EGDI includes the Telecommunication Infrastructure Index (TII), Human Capital Index (HCI) and Online Services Index (OSI). WGI components consist of Political Stability and Absence of Violence (PVE), Regulatory Quality (RQE), Voice and Accountability (VAE), Control of Corruption (CCE), Government Effectiveness (GEE) and Rule of Law (RLE). In addition, this study aims to assess how digital governance (EGDI) and institutional quality contribute to banking efficiency and profitability of commercial banks in ASEAN, measured by Return on Assets (ROA).Research approach according to the Resource-Based View and Institutional Theory, the sample consisted of 113 observations collected from commercial banks in ASEAN from 2016 to 2024, utilizing balanced panel data. The data are collected from the World Bank, United Nations, Global Financial Development and the Alfred.stlouisfed.org. The study uses the Lasso regression model, using R data processing software to identify the factors of EGDI, GDPG and WGI that impact on performance of commercial banks in ASEAN.This research suggests that ASEAN governments increasingly recognize the strategic role of digital governance (EGDI) in enhancing bank performance. Among the EGDI components, TII exhibits a significant positive association with ROA, while HCI and OSI do not yet produce comparable effectiveness. The components of WGI, PVE, RQE and VAE positively influence ROA. Conversely, CCE shows a negative effect. Although GEE and RLE do not show significant direct impacts, they remain essential for institutional development through improving the WGI index. Besides, GDPG has a positive impact on ROA, but the level of impact is not significant.First, the analysis is confined to the period of 2016-2024 and relies on secondary data, potentially introducing biases from pre-aggregated data or measurement errors within the WGI and EGDI indices. Second, the LASSO model does not inherently address endogeneity. Endogeneity, stemming from correlations between independent variables and the error term, leads to biased and inconsistent estimates. Although Lasso selects key variables and shrinks coefficients, the underlying endogeneity persists, resulting in biased estimates. Incorporating bank-specific regulatory controls from ASEAN governments, such as capital adequacy ratios, bank size and non-performing loan (NPL) ratios, can enhance insights.This research provides a unique contribution by specifically examining the components of the EGDI in ASEAN countries, focusing on a timeframe extending to 2024. The findings indicate that among the EGDI components, the TII has a positive relationship with ROA. However, the HCI and the OSI have not demonstrated equivalent effectiveness. Additionally, several components of the WGI, including PVE, RQE and VAE, had positively impacted ROA. In contrast, CCE has a negative effect, highlighting the need to manage cross-ownership and interest relationships within banks. Furthermore, GEE and RLE do not exhibit a direct or significant relationship in this study.To promote sustainable development within the banking sector, ASEAN governments should formulate long-term strategies aimed at digitizing the sector and implementing systematic, purposeful institutional reforms.While the relationship between governance, economic growth and banking performance has been widely studied, this research provides a unique contribution by specifically examining the components of the EGDI in ASEAN countries, focusing on a timeframe extending to 2024. The findings indicate that among the EGDI components, the TII has a positive relationship with ROA. However, the HCI and the OSI have not demonstrated equivalent effectiveness. Additionally, several components of the WGI, including PVE, RQE and VAE, had positively impacted ROA. In contrast, CCE has a negative effect, highlighting the need to manage cross-ownership and interest relationships within banks. Furthermore, GEE and RLE do not exhibit a direct or significant relationship in this study. To promote sustainable development within the banking sector, ASEAN governments should formulate long-term strategies aimed at digitizing the sector and implement systematic, purposeful institutional reforms.
Subjects: 
EGDI
WGI
ROA
Commercial banks
ASEAN
JEL: 
G21
O16
O23
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.