Information technology and risk factors for evaluating the banking industry in the Taiwan: an application of a Value Chain DEA

Mu-Shun Wang and Shih-Tong Lu

Journal of Business Economics and Management, 2015, vol. 16, issue 5, 901-915

Abstract: The main purpose of the paper is utilizing a new tool to measure the marginal benefits of information technology on productivity based upon identifying the two-stage best practice frontier. This study utilizes value-chain data envelopment analysis to investigate the effects of Information Technology and the trading activities of financial derivatives on the technical efficiency of a bank's production process through a two-stage analytical study with a firm-level data set. We find the impact of indicators related to capital adequacy ratios, exchange rate volatility, interest rate volatility, and long-term loans in relation to capital and ownership structure. Technical efficient precedes a reduction in problem loans, concentration of the operating units and developing information technology and utilization of financial derivatives. This paper provides a theoretical rationale and conceptualizing risk factors with environmental uncertainty. The innovation variables are determinants of the bank efficiency on Basel III Accord.

Date: 2015
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DOI: 10.3846/16111699.2014.976255

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