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IT INVESTMENT AND INTANGIBLES: EVIDENCE FROM BANKS
Author(s) -
MARTÍNOLIVER ALFREDO,
SALASFUMÁS VICENTE
Publication year - 2011
Publication title -
review of income and wealth
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.024
H-Index - 57
eISSN - 1475-4991
pISSN - 0034-6586
DOI - 10.1111/j.1475-4991.2010.00408.x
Subject(s) - euros , book value , investment (military) , economic rent , economics , market power , value (mathematics) , asset (computer security) , business , return on assets , intangible asset , fixed asset , monetary economics , capital asset , market value , finance , production (economics) , microeconomics , philosophy , computer security , earnings , machine learning , politics , profitability index , humanities , political science , computer science , law , monopoly
This paper models the investment behavior of a multi‐asset firm with market power that accumulates valuable intangible assets to complement the IT capital. The investment model is estimated using data from Spanish banks on assets of different nature: material (branches, financial), immaterial (advertising and IT), and intangible (training of workers). The paper estimates that the representative bank spends five additional Euros per Euro invested in IT‐related assets in complementary intangible assets or, equivalently, intangibles amount to approximately 10 percent of the economic value of the representative bank. The remaining economic value is distributed between 28 percent from rents attributed to market power, and 62 percent to the cost of market‐purchased assets.