DATA ANALYTICS CAPABILITY AND FINANCIAL PERFORMANCE: EVIDENCE FROM A PANEL DATA PERSPECTIVE

Abstract

This paper has examined the strategic role of data analytics capability in transforming financial decision-making and enhancing firm performance in an increasingly competitive and data-driven business environment. Data analytics capability is conceptualised as a multidimensional construct comprising advanced technological infrastructure, analytical expertise, a structured decision-making framework, and an organisational culture rooted in evidence-based practices. Grounded in the resource-based view and dynamic capabilities theory, the study positions data analytics capability as a pivotal internal resource that enables firms to adapt, innovate, and secure a competitive edge. Traditional financial management, once reliant on historical data and fixed models, is evolving into a dynamic, real-time process supported by predictive and prescriptive analytics. However, the uneven adoption of analytics, particularly in developing regions, has contributed to a performance gap, often driven by inadequate infrastructure and organisational resistance to change. In response, this study employs panel data analysis to investigate the relationship between data analytics capability and financial performance indicators, including return on assets, firm growth, and asset turnover. The impact of data analytics capability is also moderated by firm size and industry context, explaining that organisational scale and sectoral dynamics influence the effectiveness of analytics deployment. Beyond contributing empirical insights to the growing literature on analytics and performance, the research offers actionable guidance for business leaders and policymakers. It underscores the importance of sustained investment in analytical skills, data infrastructure, governance practices, and cross-functional collaboration. As data analytics capability becomes increasingly strategic, especially with the rise of artificial intelligence and cloud computing firms that embed analytics into their core financial practices are likely to improve agility, enhance decision accuracy, and strengthen overall performance in volatile market conditions.