Driving Digital Transformation: Analyzing the Impact of Internet Banking on Profitability in the Saudi Arabian Banking Sector

Round 1

Reviewer 1 Report

Title: Driving Digital Transformation : Analyzing the Impact of Internet Banking on Profitability in the Saudi Arabian Banking Sector (the title does describe the main theme)

As far as I understand your article you have created an regression model to analyse the impact of the adoption of internet banking on profitability in the Saudi Arabian banking Sector. This is an interesting article, but I do not see clearly how important it is within the Saudi Arabian context as a foreign reader. Make it clear to someone living outside Saudi Arabia.

Abstract

Line 8: be specific "... key metrics of profitability?

Line 16-17 : I am unclear as to why this study is important for strategic planning and decision-making. Be more specific as to how this study contributes to informed decision-making and strategic planning.

1. Introduction

I am trying to link the introduction to the conclusion without needing to read the body of the paper, and it seems there is information missing in the introduction. The introduction should tell me what you are going to tell me in the body of your paper. the conclusion tells me what you have told me.  You talk about an integrated econometric model, but do no show me the mathematical formulation of the econometric model in the body of the paper in the methodology section.

2. Literature Review

You mention operating performance, NET.SCR, CR, NLADV in the measurement area without anything in the literature review and their relationship with ROE and ROA. 

3Methodology

3.1 Sample

Line 134 you mention 10 banks,  and in the tables 100 observations, but it is unclear as to what those observations represent. Suggestion insert your econometric or multivariate model? Describe the data set used in the study, including its source, size, and any pre-processing steps taken. Outline the study design and the specific multivariate analysis techniques employed. Clearly define the dependent and independent variables. Report any assumptions made by the chosen multivariate technique and verify whether these assumptions were met. Present the details of the multivariate model or models used in the analysis. Specify the inclusion of covariates, interactions, or other relevant model specifications. Clearly describe the statistical software used for the analysis. Provide details on the specific commands or procedures used.

Line 135: How many of the sample size comprised conventional versus Islamic banks?

3.2 Measurement

You mention operating performance, NET.SCR, CR, NLADV here without supporting evidence in the literature review and their relationship with ROE and ROA. There is no in-text references to verify or validate these variables. Where did these figures come from. What exactly is the source of your data so that if I wanted to replicate your study I am able to do so using the same sources of data.

3.3 Preliminary Analysis

 Check for your tenses in your paper. For e.g. "Prior to engaging in multivariate analysis, a descriptive examination of the various 181 variables WAS conducted"

Your research methodology needs more detail like what is your hypotheses, what does your regression model look like mathematically or in an illustration so we can see the relationships visually.Present the results of the multivariate analysis, including coefficients, standard errors, not just p-values, and effect sizes. Include any relevant statistics, such as R-squared, likelihood ratios, or other model fit indices.

4. Results

• Interpret the results in the context of the research question or hypothesis. Discuss the practical significance of the findings.

Line 235 Table 5 I think you left the term "Decision in column three out (typo).

You have not provided any statistical errors data in your tables. Justify the use of multivariate analysis and explain why it is appropriate for the study.

5) Conclusion

Where are the limitations and assumptions of your study mentioned?

General comments;

Look at your introduction and literature review again and make sure they link to the research methodology, results and conclusions. Filter out, statements  in the intro and literature review that does not contribute (does not link to) the methodology, results and conclusions, and conceive statements that contributes (link) to the  methodology results and conclusions.

To ensure this study is reproducible, transparent and well-document you do need to do some more work. 

Line 182, when explaining the  research methodology, as it has happened in the past, it is best to describe it in past tense rather than present tense.

Author Response

Dear Reviewer,

Thank you for taking the time to provide feedback on my paper. Your insightful comments and suggestions are greatly appreciated and will undoubtedly enhance the quality and clarity of our research. I value your input and have carefully considered each of your points in revising the manuscript. Your contributions have played a vital role in refining our study and ensuring its relevance and rigor. I look forward to presenting the improved version of my paper and are confident that your feedback will contribute significantly to its success. The revisions have been diligently addressed, and I have highlighted them in yellow and red for your convenience.

• The introduction has been improved.
• Regarding the importance within the Saudi Arabian context, the study now emphasizes the strategic significance of internet banking for Saudi Arabian banks' profitability and future planning, aligning with Vision 2030 goals and guiding informed decision-making in the digital era.
• The mathematical formulation of the econometric model has been added in the methods section to provide clarity on the integrated econometric model.
• The Literature Review has been rewritten to reflect the relationship between independent variables and the dependent variable.
• All sample banks have been listed in the footnote for clarity.
• The dataset utilized in this study consists of financial and operational information obtained from the annual reports or financial statements of 10 banks operating in Saudi Arabia from 2013 to 2022. These reports were extracted from the banks' websites and the Saudi stock exchange.
• The research methodology has been amended to address any previous ambiguities.
• The interpretation of results has been discussed in detail in the Results section.
• Lastly, the Conclusion & Limitations section has been amended to address any identified limitations.

Thank you very much

Author Response File: Author Response.docx

Reviewer 2 Report

The paper is a crisp and precise one that deals with the research problem directly and that too in a systematic and scientific manner. The language of presentation is also good. So, the paper be published as such without any major modifications. 

Author Response

Dear Reviewer,

I hope this email finds you well.

Thank you for taking the time to provide feedback on my paper.

Thank you for your valuable guidance and support throughout the review process. I am grateful for the opportunity to contribute to Journal of Risk and Financial Management and look forward to the possibility of seeing the revised manuscript published in your esteemed journal.

Thank you for your time and consideration.

Warm regards,

Author Response File: Author Response.docx

Reviewer 3 Report

The paper searches for the impact of internet banking on the profitability of Saudi Arabian banks for both conventional and Islamic banks. The period chosen is from 2013 and 2022 which can be counted as recent. Analysis shows a positive influence on profitability through Return on Assets (ROA) and Return on Equity (ROE). This highlights the strategic importance of internet banking for banks and aligns with Saudi Arabia's Vision 2030 goals for the financial sector. Authors analyzed the past literature deeply and provided substantial information about the topic. Internet banking and its profitability is well documented in the text. GLS method is used to test the hypothesis, and the results were compared for conventional and Islamic banking sector.

I would increase the quality of the paper if language improvements are possible. 

Author Response

Dear Reviewer,

I hope this email finds you well.

Thank you for taking the time to provide feedback on my paper. Your insightful comments and suggestions are greatly appreciated .

I am writing to inform you that I have completed all the required corrections for language in the manuscript entitled Driving Digital Transformation: Analyzing the Impact of Internet Banking on Profitability in the Saudi Arabian Banking Sector.

Thank you for your valuable guidance and support throughout the review process. I am grateful for the opportunity to contribute to Journal of Risk and Financial Management and look forward to the possibility of seeing the revised manuscript published in your esteemed journal.

Thank you for your time and consideration.

Warm regards,

Author Response File: Author Response.docx

Round 2

Reviewer 1 Report

There has been improvement to the paper. However, I am not happy to consider it ready for publication yet.

There is evidence of plagiarism, where there are no in-text citations of statements being made supported in the literature in the introduction, land Methods section. For example "The advent of "Fintech" introduces innovative technologies 25 like blockchain, artificial intelligence, and the cloud, contributing to enhanced efficiency 26 compared to traditional processes." "Over the past two decades, Information and Communication Technology (ICT) has 44 profoundly reshaped traditional business models and service delivery mechanisms" "The technological landscape in Saudi Arabia has experienced substantial growth in 54 Information and Communication Technology (ICT). This progress is evident in the wide- 55 spread integration of technology-driven networks, revolutionizing various facets of the 56 country's financial infrastructure."" The proliferation of credit cards has facilitated cashless 59 transactions, offering individuals and businesses greater flexibility in managing their fi- 60 nances. Moreover, the advent of mobile banking has empowered users to conduct finan- 61 cial activities through their mobile devices, further enhancing accessibility and conven- 62 ience. Saudi Arabia is one of the world's largest oil producers and exporters. This makes 63 it a crucial player in the global energy market. Any disruption in Saudi oil production or 64 exports may have significant repercussions on the global economy, affecting fuel prices 65 and various industries worldwide. The introduction of debit cards has played a pivotal 66 role in facilitating electronic transactions, contributing to a transition towards a cashless 67 economy. Telephone banking services have leveraged telecommunications technology to 68 offer an additional channel for banking interactions, providing customers with the flexi- 69 bility to manage their accounts remotely" "Return on Assets (ROA) serves as a fundamental metric, representing the ratio of 174 profits to assets, offering insights into a bank's overall profitability and resource allocation 175 efficiency. This indicator allows for comparative evaluations, either across different peri- 176 ods or industry competitors. The primary objective of our study is to scrutinize the trajec- 177 tory of bank profitability as measured by ROA. Similarly, Return on Equity (ROE) acts as 178 a financial profitability ratio, illustrating the relationship between profits and equity. ROE 179 provides a snapshot of a bank's earning power and the return on investment for share- 180 holders, offering insights into the profitability of their invested capital." (these are unsubstantiated opinions).

"This paper makes a significant contribution to the understanding of the banking in- 72 dustry's dynamics, specifically in relation to the transformative influence of internet bank- 73 ing" This statement is vague- how specifically has digital transformation impacted Return on 8 Assets (ROA) and Return on Equity (ROE) as key metrics to measure profitability, in a sample of 10 9 Saudi conventional and Islamic banks observed over the 2013-2022 period. And why should anyone care?

I suggest the author/s takes each sentence and ask themselves is this my opinion or a statement that has been verified elsewhere in the literature (Can  the author/s back up the sentence with an in-text reference).

Why do you not mention the Saudi Arabian banks by name as that is public information given they are listed on the Saudi stock exchange, or how they were selected. Saying "carefully selected" is vague. Why only a sample of 10 and not all the banks? How do I know the sample is diverse without any demographic information provided of the sample itself?

You talk about digital transformation in the title, but then refer to "examination of the relationship between internet bank- 169 ing adoption and bank profitability in Saudi Arabia"- IS it a case of adoption or digital transformation impact on ROA and ROE. From 184 to 202 are sentences that have not in-text references. (this is still unclear to me)

You have not convinced me with examples of previous studies (in-text references) that the research methods used is justified and suitable.

I asked before you observed 10 companies as your sample but you have 100 observations in Table 1?

Overall you have improved the methods section, but it needs more work. Why did you use the tests that you did. Justify why your research methods are appropriate with support from other studies.

Take each hypothesis and clearly articulate the results for each. So there is a clear link between hypothesis and result for the reader. At the moment I just see alot of yellow highlights and red writing. Use headings to break up your writing.

This research is worthy of publication, but it is not quite ready yet. Please do not feel despondent. 

Author Response

Thank you for your feedback. I've carefully reviewed your comments and have made the necessary revisions to address the concerns raised. Specifically, I have added in-text references to support the statements in the introduction and methods sections where citations were previously lacking. These references provide proper attribution and support for the claims made in the paper. I believe these additions strengthen the credibility and integrity of the research. If you have any further suggestions or concerns, please feel free to let me know. Your input is greatly appreciated.

The aim of this study is indeed to examine the impact of internet banking on the profitability of the banking sector in Saudi Arabia, rather than focusing solely on the broader concept of digital transformation. I have adjusted the main objectives throughout the paper to reflect this clarification, emphasizing the examination of the relationship between internet banking adoption and bank profitability in Saudi Arabia. I appreciate your feedback and have taken steps to ensure consistency and accuracy in my study's focus and objectives. Saudi Arabian banks by name and the selection process for the sample. I have addressed this by including the names of the banks in the footnote for clarity and transparency.

I have addressed this concern by adding a section titled "Panel Data Estimation: An Overview" in which I mentioned the relevant literature supporting the use of this method. This addition provides examples of previous studies and demonstrates the justification and suitability of the research methods employed in my study. The sample consists of 10 banks observed over a period of 10 years, resulting in a total of 100 observations for each variable in Table 1.

To justify the research methods and the selection of specific tests, I have provided support from other studies in a dedicated section titled "Panel Data Estimation: An Overview." This section outlines the rationale behind the methodological choices and highlights their appropriateness within the context of previous research.

I summarized each hypothesis alongside its associated result in Table 7 for enhanced clarity.

Author Response File: Author Response.docx

Round 3

Reviewer 1 Report

Only one final comment with regards to reporting the results:

When it comes to regression analysis, the bare minimum to report are betas (unclear in your paper),their confidence interval, significance value and statistics like the R-squared. The standardised errors and beta values are also useful (unclear or not evident in your paper). You provided the constant beta, so that a reader can construct the full regression model if they need to.

Confidence intervals and standard errors are based on bootstrapping, this information is important for readers to know.

Author Response

Thank you once again for your valuable guidance and support throughout the review process.

Please find the attached file of the proof in the site.

Sincerely

Author Response File: Author Response.docx