Abstract
The impact of technology investment on bank production and employment is examined. Using a new bank-level technology spending dataset from 2000-2017, we estimate the parameters of a firm-level production function correcting for endogenous input choices. We document that technology input on average contributes about 12.85% to the increase in value-added output. We then show that the bank employment and tasks are positively correlated with their lagged technology spending in the cross-section, supporting the task-based framework of Acemoglu and Restrepo (2018). These results indicate that technology capital is highly productive and technology adoption generally lead to more employment at the firm-level.
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