This study examines the high-tech investment activity of the banking system in the period following the Global Financial Crisis, from 2009 to 2020. To gain understanding of the effect of the increasing interest of banks in high-tech investments, this research provides evidence of the relationship between the level of efficiency achieved by Euro Area banking groups and their high-tech investment aptitude.This paper ispurely exploratory given that,to the best of our knowledge, it is one of the first to address this specific research question.We analysein detail the association between bank efficiency (measured usinga stochastic frontier approach) and different high-tech investment indicators,as well as the direction of this connection to provide an explanation for the relationship.We find a stable and overall significant relationship between banks’efficiency and their high-tech investment aptitude. Moreover, we find that only medium efficiency banking groups that adopt a more diversified investment acquisition strategy havea positive relationship with high-tech investment aptitude; otherwise, the relationship between bank efficiency and high-tech investment indicators seems to be negative.Regulators should be aware of this bank acceleration in the enhancement of high-tech investment because it can reduce the stability of banking groups and because an increase inintangibles assets (e.g.patents) could also be motivated by an interest rather thanan earnings management strategy.

Can High-tech investments improve banking efficiency?

Giuliana Borello
;
2022

Abstract

This study examines the high-tech investment activity of the banking system in the period following the Global Financial Crisis, from 2009 to 2020. To gain understanding of the effect of the increasing interest of banks in high-tech investments, this research provides evidence of the relationship between the level of efficiency achieved by Euro Area banking groups and their high-tech investment aptitude.This paper ispurely exploratory given that,to the best of our knowledge, it is one of the first to address this specific research question.We analysein detail the association between bank efficiency (measured usinga stochastic frontier approach) and different high-tech investment indicators,as well as the direction of this connection to provide an explanation for the relationship.We find a stable and overall significant relationship between banks’efficiency and their high-tech investment aptitude. Moreover, we find that only medium efficiency banking groups that adopt a more diversified investment acquisition strategy havea positive relationship with high-tech investment aptitude; otherwise, the relationship between bank efficiency and high-tech investment indicators seems to be negative.Regulators should be aware of this bank acceleration in the enhancement of high-tech investment because it can reduce the stability of banking groups and because an increase inintangibles assets (e.g.patents) could also be motivated by an interest rather thanan earnings management strategy.
Banking groups, Efficiency, Cluster analysis, High-tech, patents,
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11562/1068186
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