Can we solve the international productivity paradox? Evidence from Taiwan's banking industry
by Meng-Fen Hsieh, Rong-Tsu Wang, Jui-Chang Cheng, Peter Larose
International Journal of Value Chain Management (IJVCM), Vol. 1, No. 4, 2007

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.

Online publication date: Thu, 13-Sep-2007

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