The Impact of Information and Communication Technology on Performance of Commercial Banks in Ethiopia
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Date
2016-06
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Addis Ababa University
Abstract
Information and communication technology has become the heInformation and communication technology has become the heart of banking industry, while
the banking industry is the heart of the economy. This research has considered a critical
literature review of previous researchers with the objective to examine the impact of
Information and Communication Technology on banks performance. Business organizations,
especially the banking industry is operating in a complex and competitive environment
characterized by the changing conditions and highly unpredictable economic climate with
Information and Communication Technology (ICT) is at the center of the change curve. This
study assessed the impact of ICT on the performance of Ethiopian banking industry using
secondary data over the period 2010 – 2014 published annual reports by the banks. Data
analysis is carried out in panel environment. The study employed purposive sampling technique
to select the required sample of banks from commercial banks in Ethiopia. The results were
affirmed by cointegration regression analysis. Six banks, out of the 18 commercial banks as of
June 2014, were selected for the study. The dependent variable used in this study in order to
measure the sample commercial banks performance is ROA whereas the explanatory variables
are ICT investment, ATM, POS, INF, BRAN and GDP. The study empirically analyzed the
impact of information and communication technology in commercial banks performance in
Ethiopia by constructing an econometric model to study the effect of various factors such as
ICT investment, ATM, POS, INF, BRAN and GDP. Accordingly, the impacts of ICT on return
on asset in commercial banks in Ethiopia were analyzed using the OLS technique. The
regression result showed that the ICT, ATM and POS have no statistically significant effect on
return on asset on commercial banks in Ethiopia. Based on the research findings and
conclusions the researcher recommended for commercial banks in Ethiopia to improve return
on asset, the banks should improve more on its information and communication technology so
as to enhance their performance, enlightenment has to be given to the general public through
the various media on how to use some of the information technology, ATM and POS. Finally,
banks should put more effort in advertising these products in Ethiopia.
Key words: Bank’s Performance, Banking Industry, ICT and Return on Asset.art of banking industry, while
the banking industry is the heart of the economy. This research has considered a critical
literature review of previous researchers with the objective to examine the impact of
Information and Communication Technology on banks performance. Business organizations,
especially the banking industry is operating in a complex and competitive environment
characterized by the changing conditions and highly unpredictable economic climate with
Information and Communication Technology (ICT) is at the center of the change curve. This
study assessed the impact of ICT on the performance of Ethiopian banking industry using
secondary data over the period 2010 – 2014 published annual reports by the banks. Data
analysis is carried out in panel environment. The study employed purposive sampling technique
to select the required sample of banks from commercial banks in Ethiopia. The results were
affirmed by cointegration regression analysis. Six banks, out of the 18 commercial banks as of
June 2014, were selected for the study. The dependent variable used in this study in order to
measure the sample commercial banks performance is ROA whereas the explanatory variables
are ICT investment, ATM, POS, INF, BRAN and GDP. The study empirically analyzed the
impact of information and communication technology in commercial banks performance in
Ethiopia by constructing an econometric model to study the effect of various factors such as
ICT investment, ATM, POS, INF, BRAN and GDP. Accordingly, the impacts of ICT on return
on asset in commercial banks in Ethiopia were analyzed using the OLS technique. The
regression result showed that the ICT, ATM and POS have no statistically significant effect on
return on asset on commercial banks in Ethiopia. Based on the research findings and
conclusions the researcher recommended for commercial banks in Ethiopia to improve return
on asset, the banks should improve more on its information and communication technology so
as to enhance their performance, enlightenment has to be given to the general public through
the various media on how to use some of the information technology, ATM and POS. Finally,
banks should put more effort in advertising these products in Ethiopia.
Key words: Bank’s Performance, Banking Industry, ICT and Return on Asset
Description
Keywords
Bank’s Performance; banking Industry; ICT and return on asset.