The Effect of Digital Transformation on Bank Performance
34 Pages Posted: 10 Oct 2019 Last revised: 20 Apr 2021
Date Written: September 30, 2019
This paper studies the link between digital transformation and bank performance. We find that digital transformation activities take up to five years to increase efficiency. Furthermore, we find that difficulties with digital transformation are informative of persistent decreases in efficiency and also profitability. In addition, we further show that problems related to IT infrastructure are a central obstacle to bank performance, which fits well with anecdotal evidence of so-called 'legacy IT'. This highlights the importance of careful digital transformation for sustainable bank stability.
Keywords: Digital transformation, banking, firm performance, textual analysis
JEL Classification: G21, O33
Suggested Citation: Suggested Citation