The importance of technology in banking during a crisis

Pierri, Nicola; Timmer, Yannick

doi:10.1016/j.jmoneco.2022.04.001

Cited by 38 publications

(16 citation statements)

References 99 publications

(101 reference statements)

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“…Despite the rapid development of technology, “The profitability paradox” stated that information technology does not positively affect banks’ performance (Beccalli, 2007). However, the use of digitalization has led to greater financial inclusion and expands banks’ business that impact on financial stability (Ozili, 2018; Banna and Alam, 2021; Pierri and Timmer, 2022). Uddin et al (2020) find that better allocation in CyberTech expenditures increases banks’ stability.…”

Section: Hypothesis Developmentmentioning

confidence: 99%

“…Moreover, the better direction and strategy will help banks to promote better return and gain stability. It has been shown that better capabilities to use technology in business operation allow banks to gain efficiency and better performance (Forcadell et al , 2020; Ozili, 2018; Banna and Alam, 2021; Pierri and Timmer, 2022). Digitalization in banking system is expected to grow bank market share and enhance stability.…”

Section: Main Findingsmentioning

confidence: 99%

“…Uddin et al (2020) focus on examining the relationship between CyberTech expenditures and bank stability globally in 43 countries. Pierri and Timmer (2022) examine the essentials of technology implementation during the financial crisis in the banking sector in the USA. They find that high-IT adopters relatively have a slight increase in non-performing loan and are able to provide more loans during the financial crisis.…”

Section: Introductionmentioning

confidence: 99%

“…Resource-based theory and Schumpeter theory of innovation state that the enhancement of technology increases opportunities for better performance and stability (Shanmugam and Nigam, 2020). Digital innovation in banking can help banks to gain better stability in a long run (Ozili, 2018; Pierri and Timmer, 2022; Daoud et al , 2016; Sodokin et al , 2022; Uddin et al , 2020). In addition, partnerships with non-bank institutions such as financial technology company might benefit bank competitiveness and improve performance (Klus et al , 2019).…”

Section: Introductionmentioning

confidence: 99%

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Enhancing bank stability from diversification and digitalization perspective in ASEAN

Lestari

Jun

2023

SEF

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Purpose The financial sector's resilience is associated with greater prosperity and a better average income. Banks have evolved their business model and diversified their sources of income, and bank digitalization has become one of the prominent strategies. The purpose of this study is to examine how bank service expansion represented by revenue diversification activities and digital strategy will enhance bank stability in ASEAN countries from 2010 to 2021. Design/methodology/approach This study uses information from the Datastream database and banks’ annual reports to measure bank stability, diversification and market power, which also provide information for bank digital strategy. This study uses the two-step system generalized method of moments to investigate the effect of diversification and digitalization on bank stability in ASEAN. Findings The results of this study show that bank revenue diversification has no effect on bank stability, and the presence of the chief digital officer and digital disclosure improves banks’ stability. However, alliance strategy with financial technology companies does not significantly impact bank stability and might increase bank risk. Practical implications The findings of this study provide relevant policy implications: the regulation should support bank business to diversify the source of income; regulators and policymakers should regulate and enhance the Information and Communication Technology infrastructure; and banks should design their strategy comprehensively. Originality/value This study provides new evidence of the essential role of digital strategy in enhancing bank stability in ASEAN. In addition, this study also shows how banks diversify their business in a competitive environment.

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Section: Hypothesis Developmentmentioning

confidence: 99%

Section: Main Findingsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Enhancing bank stability from diversification and digitalization perspective in ASEAN

Lestari

Jun

2023

SEF

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“…With regards to disclosure in banking industry, the financial crisis that hit the world recently made people aware of the strategic role of correct and effective market risk information (Boyle et al, 2022;Jing et al, 2022;Pierri & Timmer, 2022). This is important for the achievement of an efficient and stable financial market (Crimmel & Elyasiani, 2021;Godspower-Akpomiemie & Ojah, 2021).…”

Section: Introductionmentioning

confidence: 99%

Market Risk Disclosure: A Study on Systemic Banks in Indonesia

Setyawan

Suprianto

2022

ijtc

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This study was conducted to determine the extent to which the disclosure of market risk, especially the risk of the market carried out by banks in Indonesia. Observation of the disclosure in this study using method by Scannella and Polizzi (2018) which carried out quantitative and qualitative assessment. This study focuses on four banks in Indonesia that have a systemic impact and have Islamic subsidiaries. The year of observation is for three years from 2018 to 2020. The results showed that that in general using checklist provided by Scannella and Polizzi, (2018) the results show insufficient image of market risk disclosure among Indonesian large banks. For instance, graphical information about Value at Risk (VaR), back testing, and also stress testing. Furthermore, information about expected shortfall need to be more expanded.

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Advertising expenditures and unobserved heterogeneity in bank performance: A conditional nonparametric frontier analysis

Papadamou,

Tzeremes,

Tzeremes

2024

Manage Decis Econ

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This study utilizes a probabilistic production analysis framework to explore the relationship between advertising expenditure and operational efficiency in major U.S. banks (2001–2020). Findings reveal a non‐linear, positive correlation between advertising spending and banks' technological innovation capacity. Higher advertising investments enhance banks' competitiveness and drive technological progress. The model considers unobserved heterogeneity, incorporating factors like socio‐economic profiles and past non‐performing loans. Robustness analysis across sub‐periods confirms the enduring positive impact of advertising on bank performance.

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The importance of technology in banking during a crisis

Cited by 38 publications

References 99 publications

Enhancing bank stability from diversification and digitalization perspective in ASEAN

Enhancing bank stability from diversification and digitalization perspective in ASEAN

Market Risk Disclosure: A Study on Systemic Banks in Indonesia

Advertising expenditures and unobserved heterogeneity in bank performance: A conditional nonparametric frontier analysis

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