Impacts Of Information Technology Investment On Profitability Of Commercial Banks

The investment of traditional commercial banks in China in the field of information technology has been expanding year by year to improve their business operations.Although scholars from various countries have made certain achievements in the research on information technology investment and enterprise performance,China's research on the impact of information technology investment on the efficiency of commercial banks is still rare.Therefore,this paper attempts to analyze and verify the impact of information technology investment on the profitability of Chinese listed commercial banks from both theoretical and empirical aspects.Firstly,based on the production function theory,complementary elements theory and competitive strategy theory,this paper expounds and analyses the relationship between information technology and commercial bank's benefits from the theoretical level.The core idea is that information technology investment includes two kinds of elements: information technology capital investment and information technology labor,and the utility of these two elements is influenced by two complementary factors: business resources and human resources.When complementary factors are insufficient,the input of information technology will fail.In addition,combined with the theory of competitive strategy,this paper expounds the importance of investment in information technology for enterprises to construct market barriers and obtain excess returns.Then,this paper takes the input of information technology as the breakthrough point,and analyses the input of information technology and the income and cost of commercial banks.In the analysis,it is found that the input of information technology has both positive and negative effects on the income and cost of commercial banks.Therefore,this paper conducts empirical analysis to verify the ultimate effect of information technology investment.Empirical analysis takes the return on total assets,cost-income ratio as explanatory variables,and the proportion of information technology capital investment,information technology staff and information technology assets as explanatory variables to construct the analysis model.Empirical analysis shows that the proportion of investment in information technology capital has a significant positive effect on the return on total assets of commercial banks,while the proportion of investment in information technology labor is too high,which has exceeded the optimal scale and has a negative effect on the return on total assets of commercial banks.The higher the proportion of IT assets,the lower the operating cost.Finally,based on the results of empirical analysis,this paper analyzes the causes of the negative impact of information technology labor on the return on total assets and proposes a coping strategy.In addition,it also proposed recommendations for the future investment in information technology capital of commercial banks.