Abstract:
In the current context, the information technology has become one of the
crucial elements in economic development and a backbone of knowledgebased
economies in terms of operations, quality delivery of services and
productivity of services. Information technology can improve bank
performance in two ways: IT can reduce operational cost, and facilitate
transactions among customers within the same network. Therefore, for a
developing country like Sri Lanka, taking advantage of information
technologies has become an increasing challenge. Since banks are spending
increasing amounts of capital on information technology, it is very important
to understand the relationship between information technology investment and
bank productivity. Hence, regression model and the correlation technique are
used to analyze the relationship between information technology and
productivity. This paper presents the adoption of information technology to
productivity in the banking industries in Sri Lanka and gives an insight into
how productivity of banking has been enhanced via IT. The results are tested
on a panel of 10 Sri Lankan banks over 6 years, during the period of 2009-
2014. From the analysis it was reviewed that the bank profits increment due
to adoption of IT investment, reflecting positive network effects in this
industry.
