Impact of ICT and Human Skills on the European Financial Intermediation Sector

FCN Working Paper No. 5/2008

23 Pages Posted: 4 Jun 2010

See all articles by Georg Erber

Georg Erber

European Productivity Research Center (EPRC)

Reinhard Madlener

RWTH Aachen University

Multiple version iconThere are 2 versions of this paper

Date Written: September 1, 2008


This paper investigates the impact of ICT- and non-ICT capital, and of labour at different skill levels, on productivity and employment in the financial intermediation sector of twelve EU member countries plus the US and Japan. A stochastic possibility frontiers (SPF) approach is applied to assess the relation between the production inputs and to compute both time-varying and average inefficiencies. For the empirical analysis, annual data from 1995 to 2005 are employed that were obtained from recently released data contained in the EU KLEMS database. The results obtained shed some light on the relative impact of ICT- and non-ICT capital and labour inputs, and provide new insights about the structural dynamics between these factor inputs. We find that the financial sectors in the twelve EU member states studied are quite similar in terms of efficiency, and that efficiency and productivity depends much more on human capital than on physical capital. We conclude that learning-by-doing and learning-by-using are more decisive elements in shaping the productivity growth path than ICT investment alone, which can leave managers and employees overwhelmed by the complexity and needs of structural adjustments in the companies’ organisation.

Keywords: Stochastic Production Possibility Frontiers, ICT, Structural Dynamics

JEL Classification: C23, C51, D23, E23, O33, O47, O57

Suggested Citation

Erber, Georg and Madlener, Reinhard, Impact of ICT and Human Skills on the European Financial Intermediation Sector (September 1, 2008). FCN Working Paper No. 5/2008. Available at SSRN: or

Georg Erber

European Productivity Research Center (EPRC) ( email )

No Address Available
United States

Reinhard Madlener (Contact Author)

RWTH Aachen University ( email )

School of Business and Economics / E.ON ERC
Mathieustraße 10
Aachen, 52074
+49 241 80 49 820 (Phone)
+49 241 80 49 829 (Fax)


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