Investigating the effects of information technology investment on bank performance: considering the role of environmental dynamism and strategy

Abstract

Improving banks performance is important for investors, creditors and other stakeholders. IT as a strategic resource can help bank managers to gain competitive advantage by improving banks’ capabilities. The aim of this study is to investigate the impact of IT and two other variables on firm performance considering the moderating role of environmental dynamism and strategy. IT costs, number of employees and fixed assets are considered as independent variables which affect banks’ profit and deposit as two main variables of bank performance. The study sample consists of 102 branches of the largest Iranian private bank. Results show that IT costs appear to have a stronger positive impact on bank performance when there are greater environmental changes and more proactive branch strategy. To our knowledge this is the first study considering the moderating role of strategy and environmental dynamism in the bank industry environment.