IDEAS home Printed from https://ideas.repec.org/a/gam/jijfss/v11y2023i1p44-d1090257.html
   My bibliography  Save this article

Information Technology Governance and Bank Performance: A Situational Approach

Author

Listed:
  • Basheer Ahmad Khamees

    (Accounting Department, School of Business, The University of Jordan, Amman 11942, Jordan)

Abstract

The aim of this paper is to provide empirical evidence about the effect of organizational competition ( OC ) as a contextual factor on the relationship between the effectiveness of information technology governance ( ITG ), which informs accounting information systems, and the financial performance of banks. Financial performance is identified by return on investment (ROI), return on equity (ROE), and Tobin’s Q. Averages of these variables were calculated for five years from 2015 to 2019. In fact, there is evidence for the general argument that banks will improve their performance by implementing ITG . Specifically speaking, the basic idea presented in this study is that the relation between ITG and bank performance depends on the appropriate interaction and matching between ITG and the OC . The study population includes the senior managers of banks in Jordan. Accordingly, a questionnaire consisting of 16 paragraphs was developed and distributed to senior managers in 23 banks during January to May 2021. As a result, 142 valid questionnaires were collected, which represented 61.7% of the questionnaires expected to be collected. Data are analyzed and processed by using descriptive statistical measures, t -test, exploratory factor analysis, along with multiple regression. The results show that despite the significant effect of OC on ITG , no relation exists between the interaction of ITG and OC , and bank performance in the three proxies of performance. The results of the study suggest that either banks do not benefit from ITG to improve their performance or that the chief executive officers’ perceptions about ITG in their banks is erroneous. However, it should be clarified that the respondents could have been affected by their values and beliefs when evaluating effective ITG use in their banks.

Suggested Citation

  • Basheer Ahmad Khamees, 2023. "Information Technology Governance and Bank Performance: A Situational Approach," IJFS, MDPI, vol. 11(1), pages 1-21, March.
    • Handle: RePEc:gam:jijfss:v:11:y:2023:i:1:p:44-:d:1090257
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7072/11/1/44/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7072/11/1/44/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Clarke, Roger & Davies, Stephen & Waterson, Michael, 1984. "The Profitability-Concentration Relation: Market Power or Efficiency?," Journal of Industrial Economics, Wiley Blackwell, vol. 32(4), pages 435-450, June.
    2. Prasad, Acklesh & Heales, Jon & Green, Peter, 2010. "A capabilities-based approach to obtaining a deeper understanding of information technology governance effectiveness: Evidence from IT steering committees," International Journal of Accounting Information Systems, Elsevier, vol. 11(3), pages 214-232.
    3. Berger, Allen N & Hannan, Timothy H, 1989. "The Price-Concentration Relationship in Banking," The Review of Economics and Statistics, MIT Press, vol. 71(2), pages 291-299, May.
    4. Gordon, Lawrence A. & Smith, Kimberly J., 1992. "Postauditing capital expenditures and firm performance: The role of asymmetric information," Accounting, Organizations and Society, Elsevier, vol. 17(8), pages 741-757, November.
    5. Dadoukis, Aristeidis & Fiaschetti, Maurizio & Fusi, Giulia, 2021. "IT adoption and bank performance during the Covid-19 pandemic," Economics Letters, Elsevier, vol. 204(C).
    6. Rakan Fuad Aldomy & Chan Kok Thim & Nguyen Thi Phuong Lan & Mariati Binti Norhashim, 2020. "Bank Concentration and Financial Risk in Jordan," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 16(3), pages 31-44.
    7. Lin Tian & Liang Han & Biao Mi, 2020. "Bank competition, information specialization and innovation," Review of Quantitative Finance and Accounting, Springer, vol. 54(3), pages 1011-1035, April.
    8. S J Ho & S K Mallick, 2010. "The impact of information technology on the banking industry," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 61(2), pages 211-221, February.
    9. Lunardi, Guilherme Lerch & Becker, João Luiz & Maçada, Antonio Carlos Gastaud & Dolci, Pietro Cunha, 2014. "The impact of adopting IT governance on financial performance: An empirical analysis among Brazilian firms," International Journal of Accounting Information Systems, Elsevier, vol. 15(1), pages 66-81.
    10. Karen Watkins-Fassler & Sherma Muller, 2021. "Board composition and bank performance in a small island developing state: The case of Curacao," Estudios Gerenciales, Universidad Icesi, vol. 37(161), pages 590-600, October.
    11. Weill, Peter & Hoffmann, Francisco Gonzalez-Meza, 2007. "Banknorth: Designing IT Governance for a Growth-Oriented Business Evironment," Working papers 37282, Massachusetts Institute of Technology (MIT), Sloan School of Management.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Harman Preet Singh & Hilal Nafil Alhulail, 2023. "Information Technology Governance and Corporate Boards’ Relationship with Companies’ Performance and Earnings Management: A Longitudinal Approach," Sustainability, MDPI, vol. 15(8), pages 1-24, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kazumine Kondo, 2017. "Do credit associations compete with each other in Japanese regional lending markets?," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 41(1), pages 195-210, January.
    2. Denizer, Cevdet, 1997. "The effects of financial liberalization and new bank entry on market structure and competition in Turkey," Policy Research Working Paper Series 1839, The World Bank.
    3. Kondo, Kazumine, 2014. "Cross-Prefecture Expansion of Regional Banks in Japan and Its Effects on Lending-Based Income," MPRA Paper 52978, University Library of Munich, Germany.
    4. Ramesh Jangili, 2020. "Profitability in emerging markets: Efficiency or market power? A Study of Indian firms," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2020-003, Indira Gandhi Institute of Development Research, Mumbai, India.
    5. Kondo, Kazumine, 2010. "Does the Presence of the Japan Post Bank in a Regional Financial Market Affect the Deposit Interest Rates of Credit Associations?," MPRA Paper 24332, University Library of Munich, Germany.
    6. Olivero, María Pía, 2010. "Market power in banking, countercyclical margins and the international transmission of business cycles," Journal of International Economics, Elsevier, vol. 80(2), pages 292-301, March.
    7. Gangopadhyay, Partha & Jain, Siddharth & Bakry, Walid, 2022. "In search of a rational foundation for the massive IT boom in the Australian banking industry: Can the IT boom really drive relationship banking?," International Review of Financial Analysis, Elsevier, vol. 82(C).
    8. Goetz, Martin R. & Laeven, Luc & Levine, Ross, 2016. "Does the geographic expansion of banks reduce risk?," Journal of Financial Economics, Elsevier, vol. 120(2), pages 346-362.
    9. Jalal D. Akhavein & Allen N. Berger & David B. Humphrey, "undated". "The Effects of Megamergers on Efficiency and Prices: Evidence from a Bank Profit Function," Finance and Economics Discussion Series 1997-09, Board of Governors of the Federal Reserve System (U.S.), revised 10 Dec 2019.
    10. Azzeddine Azzam & David Rosenbaum, 2001. "Differential efficiency, market structure and price," Applied Economics, Taylor & Francis Journals, vol. 33(10), pages 1351-1357.
    11. Ashton, John K. & Hudson, Robert S., 2008. "Interest rate clustering in UK financial services markets," Journal of Banking & Finance, Elsevier, vol. 32(7), pages 1393-1403, July.
    12. Hasan, Iftekhar & Li, Xiang & Takalo, Tuomas, 2023. "Technological innovation and the bank lending channel of monetary policy transmission," BOFIT Discussion Papers 9/2023, Bank of Finland Institute for Emerging Economies (BOFIT).
    13. Richard J. Arend & Moren Lévesque, 2010. "Is the Resource-Based View a Practical Organizational Theory?," Organization Science, INFORMS, vol. 21(4), pages 913-930, August.
    14. Jith Jayaratne & Philip E. Strahan, 1996. "Entry restrictions, industry evolution and dynamic efficiency: evidence from commercial banking," Research Paper 9630, Federal Reserve Bank of New York.
    15. Reuben Soto, Sergio, 2021. "Racionalidad capitalista y principio económico," Revista de Ciencias Económicas, Instituto de Investigaciones en Ciencias Económicas, Universidad de Costa Rica, vol. 39(1), December.
    16. Schmalensee, Richard., 1985. "Testing the differential efficiency hypothesis," Working papers 1628-85., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    17. Meriem Haouat & Diego N. Moccero & Ramiro Sosa Navarro, 2012. "Foreign Banks and Credit Volatility: The Case of Latin American Countries," Review of International Economics, Wiley Blackwell, vol. 20(5), pages 1017-1033, November.
    18. Wilkin, Carla L. & Couchman, Paul K. & Sohal, Amrik & Zutshi, Ambika, 2016. "Exploring differences between smaller and large organizations' corporate governance of information technology," International Journal of Accounting Information Systems, Elsevier, vol. 22(C), pages 6-25.
    19. Bukvić, Rajko, 2017. "Концентрација И Конкуренција У Банковном Сектору Србије [Concentration and Competition in Serbian Banking Sector]," MPRA Paper 81711, University Library of Munich, Germany, revised 2017.
    20. Ricardo De Bonis & Giuseppe Bruno, 2000. "A Comparative Study Of Alternative Econometric Packages: An Application To Italian Deposit Interest Rates," Computing in Economics and Finance 2000 160, Society for Computational Economics.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jijfss:v:11:y:2023:i:1:p:44-:d:1090257. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.