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Fachbereich Wirtschaftswissenschaften, Universität Frankfurt a. M. >
Working Paper Series: Finance and Accounting, Universität Frankfurt a. M. >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/10419/39051
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| Title: | | Does IT standardization help to boost cost and profit efficiency? Empirical evidence from German savings banks  |
| Authors: | | Noth, Felix Slotty, Constantin Hackethal, Andreas |
| Issue Date: | | 2009 |
| Series/Report no.: | | Working paper series // Johann-Wolfgang-Goethe-Universität Frankfurt am Main, Fachbereich Wirtschaftswissenschaften Finance & accounting 204 |
| Abstract: | | This paper investigates the impact of IT standardization on bank performance based on a panel of 457 German savings banks over the period from 1996 to 2006. We measure IT standardization as the fraction of IT expenses for centralized services over banks' total IT expenses. Bank efficiency, in turn, is measured by traditional accounting performance indicators as well as by cost and profit efficiencies that are estimated by a stochastic frontier approach. Our results suggest that IT standardization is conducive to cost efficiency. The relation is positive and robust for small and medium-sized banks but vanishes for very large banks. Furthermore, our study confirms the often cited computer paradox by showing that total IT expenditures negatively impact cost efficiency and have no influence on bank profits. To the best of our knowledge, this paper is first to empirically explore whether IT standardization enhances efficiency by employing genuine data of banks' IT expenditures. |
| Subjects: | | IT standardization cost and profit efficiency savings banks |
| JEL: | | C23 G21 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Working Paper Series: Finance and Accounting, Universität Frankfurt a. M.
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