This study examines the impact of
innovation on performance of the Lebanese banks during 7 years period from 2009
to 2015. Based on a sample of seventeen Lebanese owned commercial banks, a
Weighted Least Squares model was employed to investigate the relationship
between two banking innovations, namely mobile banking and investment in
computer software and banks’ performance as measured by Return-On-Assets and
Return-On-Equity. Four control variables were included in the study
specifically bank’s capitalization, cost efficiency, asset quality and bank’s
size. The findings of the study showed that the two innovations studied have
both significant but opposite impact on banks’ performance.
Keywords: Innovation, Mobile
banking, Computer software, Banking performance, Lebanese banking sector,
Lebanese owned commercial banks, Weighted Least Squares.