IDEAS home Printed from https://ideas.repec.org/a/ris/ibajmb/0051.html
   My bibliography  Save this article

Profitability Paradox: Evidence from Commercial Banks in Pakistan

Author

Listed:
  • Hamid, Aatir

    (Government College University, Lahore)

  • Mehmood, Bilal

    (Government College University, Lahore)

  • Ahmad, Nisar

    (Hailey College of Commerce. University of the Punjab, Lahore)

Abstract

It is generally believed thatinformation technology(IT)impactsthe organizational profitability positively,however,empirical evidence has remained inconclusive. This was first highlighted by Solow (1987), labelled as Solow’s paradox, and later labelled as profitability paradox by Beccalli(2007). The persistence of inconclusive empirical literature provides the impetus of this research to investigate the impact of different components of IT on banks profitability in Pakistan from 2009-2016for a sample of 25 Pakistani commercial banks. Return on assets(ROA)and return on equity(ROE)have been used as indicators of bank profitability,whereas two different components of IT, numberof ATMs and investment in banks software have been employed as proxies of IT. Empirical results reveal that investment in bank software appears to have a positive influence on bank profitability, while the acquisition of ATMs seems to reduce the profitability of banks. It can be concluded that IT paradox is not necessarily a paradox of IT in totality and maybe termed as IT component paradox.

Suggested Citation

  • Hamid, Aatir & Mehmood, Bilal & Ahmad, Nisar, 2018. "Profitability Paradox: Evidence from Commercial Banks in Pakistan," Sukkur IBA Journal of Management and Business, Sukkur IBA University, vol. 5(2), pages 77-91, July-Dece.
    • Handle: RePEc:ris:ibajmb:0051
    as

    Download full text from publisher

    File URL: http://journal.iba-suk.edu.pk:8089/SIBAJournals/index.php/sijmb/article/view/115/142
    File Function: Full text
    Download Restriction: no
    ---><---

    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:ris:ibajmb:0051. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Irfan Ali Menon (email available below). General contact details of provider: https://edirc.repec.org/data/sibaspk.html .

    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.