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Wiley InterScience | ||||||||||||||
  Economic NotesVolume 36 Issue 1, Pages 43 - 76 Published Online: 25 May 2007 Journal compilation © Banca Monte dei Paschi di Siena SpA 2009
Abstract | References | Full Text: HTML, PDF (Size: 307K) | Related Articles | Citation Tracking  Information Technology and Productivity Changes in the Banking Industry We acknowledge the helpful suggestions of Allen N. Berger, Luigi Guiso, Salvatore Rossi, Stefano Siviero, two anonymous referees and the participants at the seminars held at the Bank of Italy and the Federal Reserve Board. We are also indebted with Tim Coelli who kindly made available the econometric software FRONTIER 4.1, used in part of the estimations. Ginette Eramo and Roberto Felici provided outstanding research assistance. All the remaining errors are ours. The views expressed in this paper do not necessarily represent those of the Bank of Italy. Copyright 2007 The Authors Journal compilation © 2007 Banca Monte dei Paschi di Siena SpA. KEYWORDS
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ABSTRACTThis paper analyses the effects of investment in information technologies (IT) in the financial sector using micro-data from a panel of 600 Italian banks over the period 1989–2000. Stochastic cost and profit functions are estimated allowing for individual banks' displacements from the best practice frontier and for non-neutral technological change. The results show that both cost and profit frontier shifts are strongly correlated with IT capital accumulation. Banks adopting IT capital-intensive techniques are also more efficient. On the whole, over the past decade IT capital-deepening contribution to total factor productivity growth of the Italian banking industry can be estimated in a range between 1.3 and 1.8 per cent per year. | 
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IT'S TIME TO RENEW
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