The output and profit contribution of information technology and advertising investments in banks

Alfredo Martin-Oliver and Vicente Salas-Fumas ()
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Vicente Salas-Fumas: Banco de España

No 740, Working Papers from Banco de España

Abstract: This paper examines the contribution of investments in Information Technology (IT) and in advertising to the output and profits of Spanish banks, in the period 1983-2003. We find that the growth in the stock of IT capital explains one third of output growth of banks, and that an additional investment in IT of one million euros may be substituted for twenty-five workers. The paper also finds that advertising investments increase the demand for bank services with an elasticity of 0.22 for deposits and 0.11 for loans. For all the assets considered, the null hypothesis that banks use the profit-maximizing amount of services per period cannot be rejected with the data.

Keywords: IT capital; advertising; output growth; rate of return; banks (search for similar items in EconPapers)
JEL-codes: D24 G21 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2007-12
New Economics Papers: this item is included in nep-ban
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: The output and profit contribution of information technology and advertising investments in banks (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:0740

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