## 4 Results
Conversely, higher quantiles, representing digitally advanced economies like Estonia and Denmark, appear to benefit from a more mature integration of digital banking technologies, which stabilizes ROE at higher profitability levels. Figure 3: Quantile process estimates. Authors own calculation. Note: The blue line represents the estimated coefficient across quantiles, and it shows the effect of the variable changes along the conditional distribution. The red line represents 95% confidence intervals, and it reflects the statistical uncertainty; if they do not include zero, the effect is statistically significant at that quantile. Digital inclusion (LOGDIGINCL) exerts a positive and significant influence across the ROE quantiles, particularly in the middle and upper ranges. This underscores the pivotal role of digital infrastructure in supporting financial sector performance in countries with moderate to high levels of profitability, such as Finland and the Netherlands. For lower quantiles, however, the relatively weaker impact suggests that digital inclusion alone may not suffice to overcome structural inefficiencies, emphasizing the need for complementary policy measures. The impact of technological innovation, captured by R&D expenditures (RD), is uniformly positive and intensifies at higher quantiles. This trend highlights the significant role of innovation in driving profitability in technologically advanced countries, such as Sweden and Germany, where investments in research bolster competitiveness and operational efficiency. In contrast, lower quantiles, reflecting less innovative economies, demonstrate a less pronounced benefit, signaling a lag in translating R&D investments into financial returns. The negative association between the number of banking employees (LOGBANKEMPL) and ROE is evident across all quantiles but particularly sharp in the middle range. This pattern suggests that economies with moderate financial sector performance, such as Spain and Italy, may face inefficiencies linked to overemployment in the banking sector. In higher quantiles, digitalized countries like Estonia mitigate these effects through leaner and more efficient banking structures, further affirming the role of technology in enhancing sectoral efficiency. The variable ATM density (LOGAMM) exhibits a positive yet modest impact across quantiles, with stronger effects in the middle and upper ranges. This reflects the continued relevance of physical banking infrastructure in supporting banking performance, particularly in countries where digital adoption is widespread but physical access remains an essential component of financial inclusion. Moment-based indicators (MOMENT1 and MOMENT2) reveal a strong and positive impact across the quantile distribution, highlighting the role of stability and variance in shaping ROE. The consistent patterns suggest that countries with lower volatility and higher predictability in financial outcomes, such as France and Germany, benefit from enhanced investor confidence and financial sector resilience. Overall, the quantile process estimates underscore the intricate interplay between macroeconomic conditions, digital inclusion, technological innovation, and financial sector performance in EU countries. The results highlight significant heterogeneity, with digitally advanced and innovation-driven economies demonstrating more stable and robust banking performance, while structurally constrained or less digitally integrated countries face persistent challenges in optimizing profitability. These findings underscore the importance of tailored policy interventions to address structural disparities and enhance financial sector resilience across the EU. To enhance the analytical depth of our cross-country assessment, we have addressed the variation in regulatory regimes, supervisory intensity, and digital readiness across European Union member states. These institutional differences constitute critical, yet often underappreciated, determinants of how banking automation unfolds across national contexts.