IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/30403.html
   My bibliography  Save this paper

Investing in Lending Technology: IT Spending in Banking

Author

Listed:
  • Zhiguo He
  • Sheila Jiang
  • Douglas Xu
  • Xiao Yin

Abstract

Banks’ lending technology hinges on their handling of soft and hard information in dealing with different types of credit demand. Through assembling a novel dataset on banks’ investment in information technologies (IT), this paper provides concrete empirical evidence on how banks adapt their lending technologies. We find investment in communication IT is associated with improving banks’ ability to produce and transmit soft information, while investment in software IT helps enhance banks’ hard information processing capacity. We exploit policies that affect geographic regions differentially to show causally that banks respond to an increased demand for small business credit (mortgage refinance) by increasing their spending on communication (software) IT spending. We also find that the entry of fintech induces commercial banks to increase their investment in IT—more so in the software IT category.

Suggested Citation

  • Zhiguo He & Sheila Jiang & Douglas Xu & Xiao Yin, 2022. "Investing in Lending Technology: IT Spending in Banking," NBER Working Papers 30403, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:30403
    Note: AP CF IO PR
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w30403.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jia, Xiaoran, 2024. "FinTech penetration, charter value, and bank risk-taking," Journal of Banking & Finance, Elsevier, vol. 161(C).
    2. Asano, Koji, 2024. "Managing financial expertise," International Review of Economics & Finance, Elsevier, vol. 89(PA), pages 351-365.
    3. Liao, Kezhi & Ma, Chengcheng & Zhang, Jingxue & Wang, Zhihao, 2024. "Does big data infrastructure development facilitate bank fintech innovation? Evidence from China," Finance Research Letters, Elsevier, vol. 65(C).
    4. Tan, Zhuohong & Wang, Handi & Hong, Yunzhe, 2023. "Does bank FinTech improve corporate innovation?," Finance Research Letters, Elsevier, vol. 55(PA).

    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:30403. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.