Information technology and productivity changes in the Italian banking industry

Luca Casolaro () and Giorgio Gobbi
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Luca Casolaro: Bank of Italy, Economic Research Department

No 489, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: This paper analyzes the effect of information technologies (IT) in the financial sector using micro-data on a panel of over 600 Italian banks over the period 1989-2000. We estimate stochastic cost and profit functions allowing for individual banks� displacements from the efficient frontier and for non-neutral technological change. Data on IT capital stock for individual banks enable us to distinguish between movements along the efficient frontier and shifts of the frontier owing to the adoption of new technologies. We find that both cost and profit frontier shifts are strongly correlated with IT capital accumulation. Banks adopting IT capital intensive techniques are also more efficient. We interpret this last result as evidence of a catching-up effect consistent with the usual pattern of diffusion of the new technologies.

Keywords: banking; productivity; efficiency; information technology (search for similar items in EconPapers)
JEL-codes: D24 G21 O33 (search for similar items in EconPapers)
Date: 2004-03
New Economics Papers: this item is included in nep-fin and nep-ino
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_489_04

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