A Systematic Review on the Impact of Financial Innovation on Bank Profitability: Evidence from Commercial Banks in Ethiopia

Abstract

This systematic literature review analyzes the effect of financial innovations on bank profitability in Ethiopia, highlighting research gaps, evaluating existing studies, and offering guidance for future research. It examines 25 scholarly articles published between 2013 and 2023, selected using open-access resources like Google Scholar, JSTOR, and Emerald, due to limited studies and access to established databases. Employing the PRISMA framework, the review applied specific inclusion and exclusion criteria to identify relevant studies. Descriptive analysis and citation analysis were used to evaluate various parameters and identify influential works. The findings reveal notable inconsistencies in the variables examined across studies, with contradictions both within and compared to earlier research. Most studies considered only a narrow set of variables and had limited citation impact. Furthermore, theoretical frameworks often misaligned with findings, and results were inadequately supported. The review calls for comprehensive research into financial innovations and their effect on bank profitability, urging stakeholders to address inconsistencies, explore critical variables, and adopt robust theoretical frameworks. Future studies should strive to provide clearer, more conclusive insights into this critical area.