Title: Can we solve the international productivity paradox? Evidence from Taiwan's banking industry

Authors: Meng-Fen Hsieh, Rong-Tsu Wang, Jui-Chang Cheng, Peter Larose

Addresses: Department of Finance, National Taichung Institute of Technology, No. 129, Sanmin Road, Sec. 3, Taichung City 404, Taiwan, ROC. ' Department of Finance, National Taichung Institute of Technology, No. 129, Sanmin Road, Sec. 3, Taichung City 404, Taiwan, ROC. ' Department of Finance, National Taichung Institute of Technology, No. 129, Sanmin Road, Sec. 3, Taichung City 404, Taiwan, ROC. ' Department of Finance, National Taichung Institute of Technology, No. 129, Sanmin Road, Sec. 3, Taichung City 404, Taiwan, ROC

Abstract: This study is interested in evaluating whether Information Technology (IT) contributes to banks| profit performance in an emerging market as much as it does in the USA, and also in finding any reasonable explanations for the |international productivity paradox|. We find that, using the traditional Cobb-Douglas linear model with Taiwanese data, IT does not contribute to banks| profits. However, in our modified model, which considers the size effect, the IT ratio is positively related to output. This is an important finding. Thus, the international productivity paradox could be solved by considering the size factor of a bank.

Keywords: international productivity; panel data; information technology; banking; Taiwan; profit performance; emerging markets; bank profits; size effect; output; productivity paradox.

DOI: 10.1504/IJVCM.2007.015096

International Journal of Value Chain Management, 2007 Vol.1 No.4, pp.401 - 415

Published online: 13 Sep 2007 *

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