Does ICT adoption influence the bank’s risk-taking behavior? Evidence from advanced, developing and emerging nations

Abstract

Purpose

This is the first attempt to investigate the impact of information and communication technology (ICT) on the risk-taking behavior of banks.

Design/methodology/approach

This study considers 74 advanced, developing and emerging countries in the period of 2010–2021. The study considers internet use, mobile subscriptions, broadband access and ATM availability as ICT indicators, while using bank Z_score as a proxy for risk-taking. To get comprehensive insights, pooled OLS, fixed effect models and generalized methods of moments (GMM) are applied.

Findings

It is found that ICT has a consistently positive influence on the risk-taking behavior of banks in advanced, developing and emerging countries. Notably, internet users and broadband access have a bigger impact in advanced economies, but mobile cellular subscriptions and ATMs are more significant in developing and emerging countries. Other factors, such as GDP growth and market capitalization, positively influence the bank’s risk-taking approaches, but the cost-to-income ratio and inflation have an inverse connection.

Practical implications

This will provide useful advice to the government, bank executives, financial regulators, policymakers, regulators, academicians, technology developers and other relevant stakeholders who want to maximize the advantages of ICT in the banking sector while reducing related risks.

Originality/value

This is the first study to examine the impact of ICT on banks’ risk-taking approaches in advanced, developing and emerging countries.

Citation

Jeris, S.S., Rafath, M.A.H., Shahrin, M.A. and Alharthi, M. (2024), "Does ICT adoption influence the bank’s risk-taking behavior? Evidence from advanced, developing and emerging nations", Journal of Economic and Administrative Sciences, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JEAS-05-2024-0163