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

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  • Mu-Shun Wang
  • Shih-Tong Lu

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.

Suggested Citation

  • Mu-Shun Wang & Shih-Tong Lu, 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, Taylor & Francis Journals, vol. 16(5), pages 901-915, October.
    • Handle: RePEc:taf:jbemgt:v:16:y:2015:i:5:p:901-915
    DOI: 10.3846/16111699.2014.976255
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    Cited by:

    1. Maria Elisabete Neves & Catarina Proença & António Dias, 2020. "Bank Profitability and Efficiency in Portugal and Spain: A Non-Linearity Approach," JRFM, MDPI, vol. 13(11), pages 1-19, November.
    2. Li, Shangpu, 2024. "Role of natural resources markets and environmental sustainability on economic growth," Resources Policy, Elsevier, vol. 91(C).
    3. Stephen Migiro & Patricia Shewell, 2018. "Finance Function Performance Measurement-A Data Envelopment Analysis Approach," Journal of Economics and Behavioral Studies, AMH International, vol. 9(6), pages 109-121.
    4. Li-Lun & Liu & Mu-Shun Wang & Yao-Jen & Su, 2023. "Measuring Changes in Chinese Banking Productivity and Profitability," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 13(5), pages 1-1.

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