Abstract
<p align="justify">IT plays a pivotal role to improve the competitiveness of the bank by providing its existing customers with satisfactory services, while at the same time bringing about a significant reduction in cost. This study measures the effect of IT factors on cost and profit efficiency of Private Commercial Banks (PCBs) in Bangladesh employing cost and profit Data Envelopment Analysis (DEA) and Ordinary Least Square (OLS) method. The average cost efficiency (41.4%) was recorded higher than the average profit efficiency (18.8%) for PCBs. Prime bank was the most cost and profit efficient among PCBs. The Credit card transaction (0.000006) and Credit card expenses (0.0002) were observed positively significant for cost efficiency of PCBs and the IT personnel expenses (0.0015) and Credit card transaction (0.00008) were positively significant for profit efficiency of PCBs. IT factors were found more significant for PCBs in profit efficiency. The results attained from this study could aid government, managers and depositors to remove the hindrance of progress in Bangladesh. This type of empirical analysis could be applied in another sector of the economic market.</p>
Highlights
Information Technology (IT) is more available and vital worldwide, than it was ever before in the past days
The average cost efficiency (41.4%) was higher than profit efficiency (18.8%) score implies that Private Commercial Banks (PCBs) were most cost efficient and less profit efficient
This study examined the role of IT on the cost and profit efficiency of 17 PCBs in Bangladesh during 2007-2018 employing VRS cost Data Envelopment Analysis (DEA) and profit DEA
Summary
Information Technology (IT) is more available and vital worldwide, than it was ever before in the past days. In Bangladesh, there is still a long way to go to successfully virtualize the long-run banking transactions. Technology has presented all new extents to the banking sector creating the scope for many opportunities for product marketing and enabling the organizations to manage their branches. The Online Banking system performs the banking transactions via Internet, Intranet and Extranet and the influence of IT in banking sector is huge and has worldwide influence. Huda, Momen and Ahmed (2004) commented the importance of information technology for the success in the banking sector in Bangladesh. Rahman (2010) argued that most recently with the introduction of e-commerce has taken away from the conventional banking is a giant pace towards digital Bangladesh The augmented demand for IT turned into looming and inevitable in Bangladesh banking industry (https://www.thefinancialexpress.com.bd/views/ict-in-banking-industry). Huda, Momen and Ahmed (2004) commented the importance of information technology for the success in the banking sector in Bangladesh. Rahman (2010) argued that most recently with the introduction of e-commerce has taken away from the conventional banking is a giant pace towards digital Bangladesh
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