scholarly journals Information Technology and Cost Efficiency in Malaysian Banking Industry

2020 ◽  
Author(s):  
Mohd. Zaini Abd. Karim ◽  
Abdul Rahim Anuar ◽  
Shazida Jan Mohd. Khan
Keyword(s):  
Information Technology ◽  
Cost Efficiency ◽  
Economies Of Scale ◽  
Banking Industry ◽  
Cost Effective ◽  
Bank Efficiency ◽  
Banking Efficiency ◽  
Cost Frontier ◽  
Knowledge Based ◽  
The Impact

It is argued that information technology can increase cost efficiency of banks by offering opportunities to substitute across inputs into production – for example, to substitute computer technology and information networks for labor. Hence, the transition to a knowledge-based financial sector would lead to banks becoming more competitive, more cost effective and better able in managing risks. As such, those banks that failed to make this transition are less able to compete as they lack the capability to innovate and face higher delivery costs. The main objectives of this paper are to determine the impact of IT on banking efficiency and its economies of scale using a sample of Malaysian banks. To achieve these objectives, stochastic cost frontier method is employed to estimate bank efficiency and panel data approach were used to examine the impact of IT on bank efficiency. The results indicate that the impact of IT on bank efficiency increases with increase in bank size, hence further supporting the process of bank mergers that are currently undertaken in the Malaysian banking industry.  

The Impact of Business Process Reengineering Interventions - A Case Study of State Bank of India

2017 ◽  
Vol 8 (2) ◽  
pp. 36
Author(s):  
Swati Mathur ◽  
P. N. Asthana
Keyword(s):  
Information Technology ◽  
Business Process ◽  
Business Process Reengineering ◽  
Banking Industry ◽  
Cost Effective ◽  
Process Reengineering ◽  
Efficiency And Effectiveness ◽  
Fierce Competition ◽  
Broad Objective ◽  
The Impact

With the emergence of global players, the Indian banking industry is facing fierce competition not only at its homeland but also with the international market. Due to continuous changes taking place in information technology, preferences of customers and competition, there is a need to redefine the mission objectives and process of the organization, so that the efficiency and effectiveness of the organization can be improved. While State Bank of India continues to dominate the Indian banking industry and its profits continue to grow, it is coming under increasing competitive pressure. The flattening of the world as a result of networking, information technology and globalization, necessitates SBI to bring out the drastic change in its procedural activities and redesign its business process. Business Process Reengineering aims at making the processes to be focused on producing the desired results. It also aims to be efficient by optimally using the available resources, to be cost effective by minimizing overall costs and should be adaptable by being able to adapt the changing customer and business needs. The present study focuses on business process reengineering interventions implemented in State Bank of India and the changes in the organization structure with special emphasis on Agra branches. The broad objective of the study was to relate the concept of Business Process Reengineering as a tool to enhance the competitive strength of State Bank of India and to improve its functioning to a world class level.

scholarly journals EFFECTS OF HUMAN RESOURCE MANAGEMENT ON FINANCIAL PERFORMANCE OF BANKING SYSTEM OF THE REPUBLIC OF MOLDOVA

2019 ◽  
pp. 13-18
Author(s):  
Darovannaia Alla ◽  
Lopotenco Viorica
Keyword(s):  
Banking System ◽  
Financial Indicators ◽  
Risk Environment ◽  
Bank Efficiency ◽  
Banking Efficiency ◽  
Staff Management ◽  
Republic Of Moldova ◽  
Related Risk ◽  
The Republic ◽  
The Impact

The main objective of this study is to evaluate the efficiency of the banking system of the Republic of Moldova under the impact of the resources that influence it, focusing on human resources. The assessment of banking efficiency through financial indicators includes some indicators. Analyzing the notion of efficiency it can be seen that it is dependent on several qualitative factors, which gives it a complex character. The study of bank efficiency mainly involves a causal analysis of the factors that determine the decisions in a related risk environment. In the present paper, we intend to analyze in particular the effect of the banking staff management on bank efficiency, as it is mainly dependent on the way the bank employees’ work. One of the essential factors influencing the Moldovan banking system analyzed in the present study is the efficiency of staff management.From the analysis, it can be noticed that there is a link between the banking efficiency and the efficiency of banking staff management. Banks with better indicators of bank management efficiency also have higher banking efficiency.

scholarly journals EUROPEAN BANKING INTEGRATION: IS FOREIGN OWNERSHIP AFFECTING BANKING EFFICIENCY?

2014 ◽  
Vol 16 (2) ◽  
pp. 340-368 ◽  
Author(s):  
José Luis Gallizo ◽  
Jordi Moreno ◽  
Manuel Salvador
Keyword(s):  
European Integration ◽  
Cost Efficiency ◽  
Stochastic Frontier ◽  
Foreign Ownership ◽  
Eastern European ◽  
Bank Efficiency ◽  
Banking Efficiency ◽  
European Banking ◽  
Eastern European Countries ◽  
The Cost

The aim of this study is to analyze how European integration and, especially, changes in ownership, has affected banking efficiency in Central and Eastern European countries which have recently experimented this process more intensely. Using a stochastic frontier approach, applied to panel data, we have estimated bank efficiency levels in a sample of 189 banks from 12 countries during the period 2000 to 2008 and we have analyzed the influence of some bank characteristics on these efficiency levels. The results show that European integration has significantly improved the cost efficiency of banks in these countries, but profit efficiency has significantly decreased. We have found very small differences between different ownership types and only a very small impact of foreign ownership on cost efficiency, showing that the entry of foreign ownership is not enough to explain the significant variations in banking efficiency after the accession.

scholarly journals Cost Efficiency Determinants: Evidence from the Canadian Banking Industry

2019 ◽  
Vol 15 (1) ◽  
pp. 86
Author(s):  
Abayomi Oredegbe
Keyword(s):  
Technical Efficiency ◽  
Cost Efficiency ◽  
Banking Industry ◽  
Dominant Role ◽  
Scale Efficiency ◽  
Efficiency Decomposition ◽  
Cost Inefficiency ◽  
Industry Policy ◽  
The Cost ◽  
The Impact

This study examines the cost efficiency of the banking industry in Canada. Utilizing 12 years of data (i.e., 2006 to 2017), and a two-stage data envelopment analysis (DEA), it provides insight on the determinants of the industry’s cost efficiency. It finds that the industry is cost inefficient, and that it could reduce costs by 11.52 percent. The cost inefficiency is due to technical and allocative inefficiencies, with technical inefficiency playing a dominant role. The technical efficiency decomposition shows that pure technical efficiency improved, but the scale efficiency deteriorated. The analysis of the determinants of cost efficiency reveals that deposit conversion into loans, high capitalization, and managerial tolerance for increase in administrative expense drive cost efficiency. On the other hand, market power and diversification diminish cost efficiency. In addition, the impact of profitability and credit risk are inconsequential to cost efficiency. This study contributes to literature by providing insights unique to Canada. Managers in the industry, policy makers, and regulators can point to these findings as empirical evidence supporting measures aimed at increasing the industry’s competitiveness and resilience.

scholarly journals Cost Efficiency of Banks in Croatia

2015 ◽  
Vol 1 (1-2) ◽  
pp. 12-26
Author(s):  
Ivan Huljak
Keyword(s):  
Cost Efficiency ◽  
Economies Of Scale ◽  
Financial Statements ◽  
Consolidation Process ◽  
Banking Efficiency ◽  
Frontier Analysis ◽  
Administrative Costs ◽  
Cost Efficiencies ◽  
Cost Efficient ◽  
The Cost

Abstract Foreign and larger banks in Croatia are generally considered to be more cost efficient compared with domestic and smaller banks. However, those views are often based on data from financial statements that can be misleading due to simultaneous consolidation process on the market and the existence of economies of scale. To contribute to the Croatian banking efficiency literature, we construct a panel of individual bank data for 1994-2014 period and conduct a frontier analysis to calculate bank specific X-efficiency. Our results suggest that efficiency scores depend on the cost definition as domestic and smaller banks are more efficient in managing administrative costs compared with foreign and larger banks but equally efficient in managing total costs. Results indicate that average bank relative efficiency increased on two occasions: one in the late 90s in the period of banking crisis and subsequent “market cleansing” and to a lesser extent in the period marked with financial crisis. Although the differences between bank cost efficiencies seem small, we conclude that the area is worth further research as significant gains in bank earnings could be achieved by increasing efficiency.

The Impact of Information Technology on the Management of Intellectual Capital in the Banking Industry

2007 ◽  
pp. 201-214
Author(s):  
S. Shang
Keyword(s):  
Decision Making ◽  
Information Technology ◽  
Intellectual Capital ◽  
Banking Industry ◽  
Management Quality ◽  
Study Results ◽  
Process Output ◽  
Detection Capabilities ◽  
Management Capabilities ◽  
The Impact

This study seeks answers to two questions: what types of intellectual capital are affected by IT and how can IT affect these types of intellectual capital? An analysis of intellectual capital indicators of the banking industry using an input-process-output model reveals that the process mediator variables, namely management capabilities, are highly affected by information technology. These management capabilities include risk management, quality management, taking advantage of new opportunities, product development and delivery, marketing management, and fulfilling customer needs. Information technology plays a key role in supporting decision-making, making possible business innovations and tightening controls of various processes through its tracking, informational, dissemination, analytical, simulative, and detection capabilities. Moreover, disintermediation is possible because of information technology. Although limited to one industry, it is believed that the study results can provide organizations with useful guidelines for managing intellectual capital with information technology.

Effects of branch expansion on bank efficiency: evidence from Japanese regional banks

2016 ◽  
Vol 42 (2) ◽  
pp. 82-94 ◽  
Author(s):  
Kozo Harimaya ◽  
Kazumine Kondo
Keyword(s):  
Lower Cost ◽  
Estimation Procedure ◽  
Single Step ◽  
Bank Efficiency ◽  
Content Type ◽  
Cost Frontier ◽  
Banking Policy ◽  
Current Region ◽  
Regional Banks ◽  
The Impact

Purpose – The purpose of this paper is to examine whether branch expansions have realized efficiency gains by focussing on regional banks in Japan. Design/methodology/approach – The authors use a single-step estimation procedure, where both cost frontier parameters and inefficiency effects are addressed simultaneously, and examine the impact of expanding branch networks on bank performance. Findings – The findings show that regional banks expanding their branch networks to certain levels exhibit lower cost inefficiencies. Robustness results are also obtained from the samples, excluding the regional banks located in urban regions. Originality/value – The findings suggest that adequate levels of branch expansion have beneficial impacts for regional banks, although this result is contrary to the current region-based relationship banking policy promoted by Japan’s financial regulators.

scholarly journals IMPACT OF INFORMATION TECHNOLOGY AND DIGITALIZATION ON BANKING STRATEGY PRE-COVID-19, CHALLENGES IN THE COVID ERA AND POST-COVID STAKES

2021 ◽  
Vol 6 (2) ◽  
pp. 60-73
Author(s):  
Syrine Ben Romdhane
Keyword(s):  
Information Technology ◽  
Financial Services ◽  
Banking Sector ◽  
Banking Industry ◽  
Jel Classification ◽  
Digital Transformation ◽  
Strategic Plans ◽  
Banking Strategy ◽  
The One ◽  
The Impact

The spread of information technology and the digitalization of financial services raise a range of theoretical questions as the structures of the banking industry undergo change. This change has intensified with the impact of the COVID-19 pandemic which is already being observed. The purpose of this study is therefore threefold: (1) to analyze the impact of IT and the digitalization of financial services on the strategy and functioning of the pre-COVID-19 banking sector; (2) to study the challenges banks are facing in the COVID era in managing the crisis, and (3) to highlight post-COVID stakes.  This study shows, on the one hand, that the crisis confirms the need for banks to combine physical proximity and digital offer, and on the other hand, that digitalization could be the solution for banks to consistently mitigate risks. Through this digital transformation and their ability to re-invent themselves, the banks would guard against potential similar crises. By adopting a more digitized and open behavior, they would be immune to such crises because they would have appropriate strategic plans, as they would be better equipped to counter the threats and better prepared to transform them into opportunities. JEL Classification Codes: B26, B41, G21, G32, O32.

scholarly journals Determinants of Bank Efficiency: Evidence from Czech Banking Sector

2015 ◽  
Vol 63 (3) ◽  
pp. 1005-1011
Author(s):  
Rostislav Staněk
Keyword(s):  
Commercial Bank ◽  
Cost Efficiency ◽  
Best Practice ◽  
Banking Sector ◽  
Efficiency Frontier ◽  
Profit Efficiency ◽  
Bank Efficiency ◽  
The Impact

The paper identifies bank-specific determinants of Czech commercial bank efficiency during the period 2000–2012. The paper employs a panel version of a stochastic efficiency frontier model with time variant efficiency to identify the impact of bank size and the structure of bank’s portfolio on the bank’s cost and profit efficiency. The results of the estimation show that bank size has no impact on cost efficiency but it negatively influences the bank’s ability to generate revenue. Cost efficiency increases with deposit-to-assets ratio and profit efficiency increases with loans-to-assets ratio. During the examined period average bank lost one fourth of its profit compared to best-practice bank.

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