Exploresearch (ISSN: 3048-815X) ( Vol. 03 | No. 3 | July - September, 2026 )

Disaggregating Digital Financial Inclusion: Credit Card, Debit Card, and ATM Channels as Drivers of CAMEL-Based Bank Performance in India

Author: Dr. Ankita Chaturvedi & Roop Laxmi Saini

Purpose: This study examines whether digital financial inclusion (DFI) affects the financial performance of commercial banks in India, and whether the strength and direction of this relationship depend on which digital transaction channel is examined. Design/Methodology/Approach: The study uses an unbalanced panel of 61 scheduled commercial banks (676 bank-year observations, 2014–2025). DFI is operationalised through three log-transformed indicators — credit card transactions (ln_cct), debit card transactions (ln_dct), and ATM-related infrastructure (ln_atm) — and bank performance through the five CAMEL dimensions: capital adequacy, asset quality, management efficiency, earnings, and liquidity. Given the high level of collinearity between ln_dct and ln_atm (r = 0.987; VIF > 38), each dependent variable is estimated through two parallel models using Pooled OLS, Fixed Effects and Random Effects, with the estimator selection criteria being the Hausman test and HAC standard errors used for testing. The objective of profitability is also estimated using control variables and dynamic System GMM model. Results: The impact of credit card transactions on capital adequacy, non-performing assets and profitability (ROA, NIM and ROE in case of System GMM estimation) proves to be consistently positive. Debit card transactions and ATM are linked to increased business per employee but are also positively related to low asset quality and their relationship with capital adequacy and profitability is not proven robust to HAC correction. Liquidity results are indicator-dependent. Practical Implications: DFI strategies need to be assessed individually, matching up debit card- and ATM-driven expansion with more effective management of credit risk, instead of assuming that DFI is an all-round positive development for banks. Originality/Value: The paper distinguishes between different channel indicators of DFI in a comprehensive CAMEL-based static and dynamic panel model analysis, filling in a research gap in Indian and international literature.

Chaturvedi, A. & Saini, R. (2026). Disaggregating Digital Financial Inclusion: Credit Card, Debit Card, and ATM Channels as Drivers of CAMEL-Based Bank Performance in India. Exploresearch, 03(03), 122–134. https://doi.org/10.62823/exre/03.03.270

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DOI:

Article DOI: 10.62823/exre/03.03.270

DOI URL: https://doi.org/10.62823/exre/03.03.270

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