The Effect of Financial Innovation and Bank Competition on Firm Value: A Comparative Study of Malaysian and Nigerian Banks

This study examines the effect of financial innovation (FI) and bank competition on firm value. FI is the act of creating new financial instruments as well as new financial technologies, institutions, and markets. The study used the sys-GMM estimation technique based on data extracted from 26 commercial banks in Nigeria and Malaysia over the period 2009 to 2019, totaling 286 observations. Given the results of the study, FI has a significant negative effect on firm value in Nigeria, and bank competition has a significant negative effect on firm value in Nigeria. By contrast, FI has a significant positive effect on firm value in Malaysia, and bank competition has a significant positive effect on firm value in Malaysia. The return on asset (ROA), bank size, GDP growth, and the inflation rate are significantly related to firm value. The interactive effect (FI * COMP) has a significant positive relationship with firm value in Nigeria and Malaysia. The empirical study confirms the notion that FI is a real driver of economic progress, competitiveness, and economic development. According to the study, policymakers should address the weaknesses exposed by the financial crisis, which contributed to the introduction of various current financial regulatory frameworks to capture the risks posed by the FI process. KCI Citation Count: 0