Efficiency Analysis of IT investment in Polish Banks (1998-2008): An Application of Malmquist Productivity Index

This paper empirically researches the productivity changes of Polish banking industry during period of 1998-2008, by applying a non-parametric Malmquist Productivity Index (MPI) method. This methodology is well establishing approach in exploring performance measures, productivity growth, technological change and technical efficiency. In specifying the variables input-output, an asset/profit approach has been is chosen, which simplify the potential correlation between financial results of the bank with the investment level in IT. Results indicate that during the study period, over eleven years Polish banking industry experienced steady technological progress. All 17 biggest banks chosen for the study, which represent 85% of the asset base, have maintained overall productivity gain. Within this group analysis shows no significant difference linked to the scale/size of the banks. Local inefficiency observed does not seem to have any systematic pattern.