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The importance of technology in banking during a crisis

Nicola Pierri and Yannick Timmer

Journal of Monetary Economics, 2022, vol. 128, issue C, 88-104

Abstract: What are the implications of information technology (IT) in banking for financial stability? Data on US banks’ IT equipment and the background of their executives reveals that higher pre-crisis IT adoption led to fewer non-performing loans and more lending during the global financial crisis. Empirical evidence indicates a direct role of IT adoption in strengthening bank resilience; this includes instrumental variable estimates exploiting the historical location of technical schools. Loan-level analysis shows that high-IT banks originated mortgages with better performance, indicating better borrower screening. No evidence points to offloading of low-quality loans, differences in business models, or enhanced monitoring.

Keywords: Technology; Financial stability; IT Adoption; Non-performing loans; Screening (search for similar items in EconPapers)
JEL-codes: D82 D83 E44 G14 G21 O3 (search for similar items in EconPapers)
Date: 2022
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Working Paper: The Importance of Technology in Banking during a Crisis (2022) Downloads
Working Paper: The importance of technology in banking during a crisis (2021) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:128:y:2022:i:c:p:88-104

DOI: 10.1016/j.jmoneco.2022.04.001

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