The Relationships between Information Technology, E-Commerce, and E-Finance in the Financial Institutions: Evidence from the Insurance Industry
This research investigates the impact of IT on the cost efficiencies and cost frontiers of the insurance industry. In addition, we compare the differences of the effect of IT on the insurance industry across countries. Moreover, we test the international market’s integration hypothesis and explore the influences of other factors (e.g., scope economy, macroeconomic variables, etc.) on the cost efficiencies of the insurance industry. The evidence from both the two-equation and Tobit models indicates that IT improves cost efficiencies for the developed countries but reduces those for the newly developed economies under study. That is, the international productivity paradox hypothesis is rejected for the insurance firms in the developed countries considered. In addition, results of the cost frontiers for the insurance firms suggest that, IT improves the cost efficiency for the developed countries but not for the emerging economies.
KeywordsFinancial Institution Commercial Bank Cost Efficiency Insurance Industry Political Risk
Unable to display preview. Download preview PDF.
- 7.Frei, F.X., Harker, P.T., Hunter, L.W.: Inside the Black Box: What Makes a Bank Efficient. In: Performance of Financial Institutions: Efficiency, Innovation, Regulation, pp. 259–311. Cambridge University Press (2000)Google Scholar
- 12.Lin, H.J., Lin, W.T., Chen, Y.H.: Technological Progress and Time-Varying Patterns of Cost Efficiencies in Commercial Banks: An International Comparison, in progress (2004)Google Scholar
- 13.Odoyo, F.S., Nyangosi, R.: E-Insurance: An Empirical Study of Perceived Benefits. International Journal of Business and Social Science 2(21), 166–171 (2011)Google Scholar
- 14.Prassad, B., Harker, P.T.: Examining the Contribution of Information Technology Toward Production and Profitability in U.S. Retail Banking, Report 97-109, The Wharton Financial Institutions Center, University of Pennsylvania, PA (1997)Google Scholar
- 15.PRS Group Inc., International Country Risk Guide, East Syracuse, New York (2001) Google Scholar
- 18.Yates, J.: Information Technology and Business Processes in the 20th Century Insurance Industry. Business and Economic History 21, 317–325 (1992)Google Scholar