Evaluation of information technology impact on bank’s performance: The Ghanaian experience

Abstract

With the introduction of information technology (IT), a lot of organizations are making significant investment on them. These organizations see IT as a tool for having a competitive advantage. This increasing dependence on IT by organizations has generated the debate to assess its impact on organization’s performance. The results of previous studies on IT and firms’ performance are consistently attributed to the lack of valid quantitative measures. Non-parametric models like data envelopment analysis (DEA) have been suggested to be a good qualitative measure of IT impact on organizations performance compared to parametric methods. This current study applied a two-stage DEA model on 444 Ghanaian bank branches. The efficiencies were determined using the Robust DEA package in R programming. The results suggested that IT had significant impact on the banks’ overall performance as a good number of them (78.82%) were efficient in their entire operations, even though their respective efficiencies in deposit and investment were not good. In conclusion, further studies can combine DEA with machine learning algorithms to study the impact of IT on firms’ performances using the study’s data.