“The Effect of Cyber Risk on Banks Profitability in Egypt”: An Empirical Analysis

Abstract

Recent years have seen an impressive increase in the integration of financial technology or fintech in the global banking industry, resulting in product, service, and operational developments. Nowhere has this shift in focus been more pronounced than in fintech, a sector that has seen remarkable growth in Egypt. Nevertheless, this is not without its difficulties since integrating technology means that their banks are more susceptible to cyber risk, which could decrease its profitability. This research aims to assess whether cyber risk exerts a statistically significant negative impact on the profitability of banks in Egypt, utilizing a sample of 16 banks spanning the years 2017 to 2022. The study employs panel data analysis through STATA 14 for its investigation. The findings demonstrated that cyber risk has a negative significant effect on bank profitability, and this assumption was supported by the study's findings. According to the findings, cyber risk has a significant and negative impact on both ROA and GPM. As a consequence of this, it is necessary to incorporate preventative measures in order to deal with the constantly shifting cyber threat landscape. It is also essential to highlight the significant role that technology and data security play in ensuring that the banking industry remains robust and profitable in the digital era.