Impact of Information Technology (IT) Investment on Banks’ Performance: A Study on Dhaka Stock Exchange (DSE) Listed Banks of Bangladesh

Abstract

In Bangladesh, Information and communication technology (ICT) has become the impetus of current financial sector. Globalization, technological advancement and innovation, make it imperative for the banking industry in Bangladesh to invest more on ICT to stay ahead in the competition. This paper intends to explore the relationship between Information Technology (IT) investment and banks’ performance. This study is conducted on Dhaka Stock Exchange (DSE) listed banks and especially five commercial banks are selected for this research. Based on secondary data, this research is quantitative and longitudinal in nature. The correlation and regression models have been used to measure the relationship between Information Technology (IT) investment and banks’ performance. Bank’s performance has been measured by Return on Investment (ROI), Net Profit Margin (NPM), Return on Equity (ROE) and Return on Asset (ROA). The findings of this study reveal that a positive relationship exists between IT Investment and banks performance. Hence, it is suggested that more thought has to be put towards the investment and use of Information and Communication Technology in banking sector.

Keywords: ICT, Information Technology, Investment, Bank, Evaluation, Bangladesh.