Investments in Information and Communication Technology and Bank´s Performance: Panel Data Evidence From Nigeria

Abstract: The study examined the investments by Nigerian banks in ICT development and maintenance and their implications for corporate performance using panel data methodology that modelled for pooled, fixed, random, and redundant effects. It also employed the Granger causality test to determine if causal relations exist between the variables. Globally, ICT investments were found to positively and significantly affect profitability. The evidences from the three panel data models are consistent in showing that while the relationship between ICT development and bank performance is significant, that between ICT maintenance and ROA is not significant. The above results also agree with the findings of uni-directional causality flowing from ICT development to profitability, but not vice versa. It was also found that there is no significant causality flowing from ICT maintenance to profitability. Thus, sustained investments in ICT development, with prudent maintenance expenditure, will go a long way to boosting bank performance.

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Authors: Chinedu B. Ezirim, Kennady I. Nnaji, Ucheoma I. Ezirim, Uchenna Elike