ICT Investments on The Performance of Banks in Africa

ABSTRACT

Several studies have revealed conflicting results as regards the actual impact of ICT on corporate performance. While some conclude that ICT does not make a significant contribution to corporate performance; others posit that ICT contribution to corporate performance is immense. This study is borne out of this curiosity to ascertain the actual impact of ICT investments on corporate performance in African banks, using Nigerian banks as case study. The paper employed a combination of questionnaires and observation to collect information from the staff and customers of the banks to evaluate the influence of ICT related problems on the performance of the financial institutions. The paper equally used secondary information such as annual statements of accounts of the sampled banks, Nigerian Deposit Insurance Commission (NDIC) and Central Bank of Nigeria (CBN) publications to determine the performance of the banks via such performance measures as net income (the dependent variable) against the various investments of banks, which include ICT investments, investments in non-ICT labour and other investments for a period of ten years (1998 to 2007).  Thus, the paper examines the relationship between ICT investments and banks performance. It made two phases of analysis. In the first phase of analysis, multiple regression analysis was used via SPSS 15 to test the first hypothesis on whether or not ICT applications and  investments significantly contribute to the performance (measured in terms of net income) of Nigerian banks. In the second phase of analysis, Chi–square test was employed to test the second hypothesis on whether or not ICT related problems influence the performance of Nigerian banks. The study revealed that ICT investments do not contribute significantly to the profitability of Nigerian banks and   ICT related problems influence the performance of Nigerian banks. Based on the findings and conclusions, the paper recommended that Nigerian banks develop internal maintenance skills, invest more on latest ICT technologies that make use of biometrics as security solutions, make complimentary investments on business process reengineering and fully maximize the opportunities available in information and communication technology.

Keywords: ICT Investments, Nigeria, Banks


Adejola, A.P. (2010) The Impact of ICT Investments on The Performance of Banks in Africa: An Appraisal Of Nigerian Banks, Anthology of Abstracts of the 3rd International Conference on ICT for Africa, March 25-27, Yaoundé, Cameroon. Baton Rouge, LA: International Center for IT and Development.

TO ACCESS FULL PAPER, CONTACT AUTHORS VIA CORRESPONDING EMAIL (padejole@yahoo.com).

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