Binuyo, A.O., South Africa; Aregbeshola, R.A., South Africa
This paper contributes to the ongoing debate regarding the contribution of Information and Communication Technology (ICT) to firm's performance. As the ICT impact on bank performance is beyond the scope pf most similar studies, this study further investigates the impact of Information and Communication Technology Cost Efficiency (ICTCE) on the performance of banks as well. The study assessed the impact of ICT on the performance of South African banking industry using annual data over the period 1990-2012 published by Bankscope - World banking information source. Data analysis is carried out in a dynamic panel environment using the orthogonal transformation approach. The robustness of the results was affirmed by residual cointegration regression analysis using both Pedroni and Kao methods. The findings of the study indicated that the use of ICT increases return on capital employed as well as return on assets of the South African banking industry. The study discovers that more of the contribution to performance comes from information and communication technology cost efficiency compared to investment in information and communication technology. The study recommends that banks emphasize policies that will enhance proper utilization of existing ICT equipment rather than additional investments. © Adekunle Oluwole Binuyo, Rafiu Adewale Aregbeshola, 2014.