Does Information Technology Always Help? Theory and Evidence from Taiwan's Banking Industry
- 10.2991/jcis.2006.147How to use a DOI?
- Information Technology, Networks, Product Differentiation
Information technology (IT) has been extensively adopted in banking industries. The reasons for this massive adoption of IT are mainly twofold: for individual banks, IT can reduce banks’ operational costs (the cost advantage), and facilitate transactions among customers within the same network (the network effect). Thus it seems perfectly safe to argue that the introduction of IT service can enhance profits in the banking industry. This point of view, however, is not commonly shared by empirical studies. This inconsistency in empirical results motivates us to contemplate IT’s influence to the whole industry, rather than to the individual banks. It would be appealing to ask: When all banks in the industry have the same access to this cost-saving technology, will the cost advantage from adopting IT vanishes due to competition? Will the presence of multiple networks bring determinative benefits to each bank in the industry? The purpose of our paper is to provide the answers by investigating the equilibrium in a differentiated product model with network effects, and identify factors affecting each effect of IT. Then the testable results are examined empirically with the data from the banking industry in Taiwan, covering 47 domestic commercial banks from 1991 to 2004.
- © 2006, the Authors. Published by Atlantis Press.
- Open Access
- This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).
Cite this article
TY - CONF AU - Hsieh Meng-Fen AU - Shirley J. Ho PY - 2006/10 DA - 2006/10 TI - Does Information Technology Always Help? Theory and Evidence from Taiwan's Banking Industry BT - Proceedings of the 9th Joint International Conference on Information Sciences (JCIS-06) PB - Atlantis Press SN - 1951-6851 UR - https://doi.org/10.2991/jcis.2006.147 DO - 10.2991/jcis.2006.147 ID - Meng-Fen2006/10 ER -