Profitability Paradox: Evidence from Commercial Banks in Pakistan

Aatir Hamid (), Bilal Mehmood and Nisar Ahmad
Additional contact information
Aatir Hamid: Government College University, Lahore
Bilal Mehmood: Government College University, Lahore
Nisar Ahmad: Hailey College of Commerce. University of the Punjab, Lahore

Sukkur IBA Journal of Management and Business, 2018, vol. 5, issue 2, 77-91

Abstract: It is generally believed thatinformation technology(IT)impactsthe organizational profitability positively,however,empirical evidence has remained inconclusive. This was first highlighted by Solow (1987), labelled as Solow’s paradox, and later labelled as profitability paradox by Beccalli(2007). The persistence of inconclusive empirical literature provides the impetus of this research to investigate the impact of different components of IT on banks profitability in Pakistan from 2009-2016for a sample of 25 Pakistani commercial banks. Return on assets(ROA)and return on equity(ROE)have been used as indicators of bank profitability,whereas two different components of IT, numberof ATMs and investment in banks software have been employed as proxies of IT. Empirical results reveal that investment in bank software appears to have a positive influence on bank profitability, while the acquisition of ATMs seems to reduce the profitability of banks. It can be concluded that IT paradox is not necessarily a paradox of IT in totality and maybe termed as IT component paradox.

Keywords: Information technology (IT); Return on assets (ROA); Return on equity (ROE); Bank Software; Differencegeneralized method of moments. (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://journal.iba-suk.edu.pk:8089/SIBAJournals/in ... article/view/115/142 Full text (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:ibajmb:0051

Access Statistics for this article

Sukkur IBA Journal of Management and Business is currently edited by Khalid Ahmed

More articles in Sukkur IBA Journal of Management and Business from Sukkur IBA University Publications Cell, Office of Research, Innovation & Commercialization - ORIC, Sukkur IBA University, Airport Road Sukkur-65200, Sindh, Pakistan. Contact information at EDIRC.
Bibliographic data for series maintained by Irfan Ali Menon ().