Abstract
Based on the World Development Indicators data provided by the World Bank, we investigate the effect of information and communication technology (ICT) on the profits and risk of financial distress of the EU 28 banking industry. Specifically, we address the question of whether and how ICT diffusion, adoption and infrastructure (e.g., ATM penetration) affect banking profitability and stability over the period 1995–2015. Our results show that ICT exerts a positive role in improving these performance measures. In addition, we find that overall financial stability in the banking industry is enhanced with the intensive adoption of both IT and financial technologies, which increase the distance to default.
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