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The Importance of Technology in Banking during a Crisis

Nicola Pierri () and Yannick Timmer
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Nicola Pierri: https://www.imf.org/en/Research/Researcher-CV/Author/Pierri-Nicola?AuthID=324#Background

No 2022-020, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

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 O30 (search for similar items in EconPapers)
Pages: 47 p.
Date: 2022-04-13
New Economics Papers: this item is included in nep-ban, nep-eff, nep-fdg, nep-ict, nep-mac and nep-pay
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https://www.federalreserve.gov/econres/feds/files/2022020pap.pdf (application/pdf)

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Journal Article: 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:fip:fedgfe:2022-20

DOI: 10.17016/FEDS.2022.020

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