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Information technology and risk factors for evaluating the banking industry in the Taiwan: an application of a Value Chain DEA

    Mu-Shun Wang Affiliation
    ; Shih-Tong Lu Affiliation

Abstract

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.

Keyword : efficiency, Basel III Accord, Value-Chain DEA, financial derivatives, Tobit regression, commercial banks, problem loan

How to Cite
Wang, M.-S., & Lu, S.-T. (2015). Information technology and risk factors for evaluating the banking industry in the Taiwan: an application of a Value Chain DEA. Journal of Business Economics and Management, 16(5), 901-915. https://doi.org/10.3846/16111699.2014.976255
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Oct 26, 2015
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This work is licensed under a Creative Commons Attribution 4.0 International License.