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A Study on the Productivities of IT Capital and Computer Labor: Firm-level Evidence from Taiwan’s Banking Industry

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Abstract

The current paper extends the non-neutral stochastic frontier production function—which belongs to the class of a one-step procedure as defined by Wang and Schmidt (2002) and developed by Huang and Liu (1994)—from a cross-sectional setting to a panel data modeling. Using a newly-surveyed dataset from Taiwan’s commercial banks on their investments in information and communication technologies (IT), I find that IT capital and computer labor tend to exhibit higher productivities than their non-IT and non-computer counterparts, that IT capital has positive impacts on the marginal productivities of computer labor and borrowed funds, and that the mean technical efficiency is around 87.7%. Evidence is found that the total factor productivity of the banking sector grew at an average rate of 0.28% per annum, albeit fluctuating, for the past 8 years.

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Authors and Affiliations

  1. Department of Money and Banking, National Chengchi University, 64 Section 2, Zhi-nan Road, Wenshan,Taipei, 11605, Taiwan, The Republic of China

    Tai-Hsin Huang

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  1. Tai-Hsin Huang
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Correspondence to Tai-Hsin Huang.

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Huang, TH. A Study on the Productivities of IT Capital and Computer Labor: Firm-level Evidence from Taiwan’s Banking Industry. J Prod Anal 24, 241–257 (2005). https://doi.org/10.1007/s11123-005-4933-4

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  • DOI: https://doi.org/10.1007/s11123-005-4933-4

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