IT and Efficiency Analysis in Commercial Banks and Insurance Firms

This research explores the contribution of
information technology (IT) and telecommunication
investments (COM) to commercial banks and insurance
companies all over the world. We employ the
generalized stochastic frontier approach to measure
the cost and profit efficiencies and scope economy
for commercial banks in 51 countries and insurance
companies in 25 countries. Moreover, the Tobit model
and the multivariate analysis are used to testing
the impacts of IT and COM.

Four findings are listed below. 1) IT improves the
cost and profit efficiencies of these two financial
institutions uniformly across the developed and
developing countries considered. 2) The impact of IT
on the efficiencies for commercial banks is more
significant than that for the insurance firms. 3)The
newly developing countries outperform the developed
countries in terms of the contribution of COM to the
efficiencies. Therefore, the leapfrog phenomenon may
exist in terms of COM in e-finance. 4) Both
international banking markets and insurance markets
are found to be not integrated via the multivariate
analysis. Several policy implications drawn from
these findings.

Autorentext

Dr. Hong-Jen Lin earned Ph.D. University at Buffalo in 2004. He is currently an assistant professor in finance and management science at Brooklyn College,CUNY. His research the fields include e-banking, asset pricing and methodologies. His articles have appeared in several prestigious finance and e-commerce journals

Klappentext

This research explores the contribution of information technology (IT) and telecommunication investments (COM) to commercial banks and insurance companies all over the world. We employ the generalized stochastic frontier approach to measure the cost and profit efficiencies and scope economy for commercial banks in 51 countries and insurance companies in 25 countries. Moreover, the Tobit model and the multivariate analysis are used to testing the impacts of IT and COM.Four findings are listed below. 1) IT improves the cost and profit efficiencies of these two financial institutions uniformly across the developed and developing countries considered. 2) The impact of IT on the efficiencies for commercial banks is more significant than that for the insurance firms. 3)The newly developing countries outperform the developed countries in terms of the contribution of COM to the efficiencies. Therefore, the leapfrog phenomenon may exist in terms of COM in e-finance. 4) Both international banking markets and insurance markets are found to be not integrated via the multivariate analysis. Several policy implications drawn from these findings.