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Title: The Impact of Information Technology on the Banking Industry:Theory and Empirics
Authors: Ho,Shirley J.;Mallick,Sushanta K.
Contributors: 政大經濟系
Keywords: Studies;Operations research;Information technology;Banking industry;Impact analysis
Date: 2010-12
Issue Date: 2013-09-17 10:11:07 (UTC+8)
Abstract: This paper develops and tests a model to examine the effects of information technology (IT) in the US banking industry. It is believed that IT can improve bank’s performance in two ways: IT can reduce operational cost (cost effect), and facilitate transactions among customers within the same network (network effect). The empirical studies, however, have shown inconsistency on this hypothesis; some agree with the Solow Paradox, some are against. Since most empirical studies have adopted the production function approach, it is difficult to identify which effect has dominated, hence the reasons attributed have been the difference in econometric methodology and measurement. This paper attempts to explain the inconsistency by stressing the heterogeneity in banking services; in a differentiated model with network effects, we characterize the conditions to identify these two effects and the conditions for the two seemingly positive effects to turn negative in the equilibrium. The results are tested on a panel of 68 US banks over 20 years, and we find that the bank profits decline due to adoption and diffusion of IT investment, reflecting negative network effects in this industry.
Relation: Journal of the Operational Research Society, 61(2), 211-221
Data Type: article
DOI 連結:
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