INFORMATION TECHNOLOGY AND RISK FACTORS FOR EVALUATING THE BANKING INDUSTRY IN THE TAIWAN: AN APPLICATION OF A VALUE CHAIN DEA | Zendy

Mu-Shun Wang | Zendy; Shih-Tong Lu | Zendy

Open Access

INFORMATION TECHNOLOGY AND RISK FACTORS FOR EVALUATING THE BANKING INDUSTRY IN THE TAIWAN: AN APPLICATION OF A VALUE CHAIN DEA

Author(s) -

Mu-Shun Wang,

Shih-Tong Lu

Publication year - 2015

Publication title -

journal of business economics and management

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.485

H-Index - 37

eISSN - 1611-1699

pISSN - 2029-4433

DOI - 10.3846/16111699.2014.976255

Subject(s) - data envelopment analysis , volatility (finance) , economics , industrial organization , productivity , information technology , marginal value , stochastic frontier analysis , capital structure , business , econometrics , production (economics) , finance , microeconomics , computer science , macroeconomics , mathematical optimization , mathematics , operating system , debt

The main purpose of the paper is utilizing a new tool to measure the marginal benefits of information technology on productivity based upon identifying the two-stage best practice frontier. This study utilizes value-chain data envelopment analysis to investigate the effects of Information Technology and the trading activities of financial derivatives on the technical efficiency of a bank's production process through a two-stage analytical study with a firm-level data set. We find the impact of indicators related to capital adequacy ratios, exchange rate volatility, interest rate volatility, and long-term loans in relation to capital and ownership structure. Technical efficient precedes a reduction in problem loans, concentration of the operating units and developing information technology and utilization of financial derivatives. This paper provides a theoretical rationale and conceptualizing risk factors with environmental uncertainty. The innovation variables are determinants of the bank efficiency on Basel III Accord.

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