IMPACT OF INVESTMENTS IN TECHNOLOGY ON THE PROFITABILITY OF THE BRAZILIAN BANKING SECTOR
DOI:
https://doi.org/10.24023/FutureJournal/2175-5825/2021.v13i1.482Keywords:
Investment, Profitability, Information Technology, Brazilian Banking SectorAbstract
Purpose: To analyze the relationship between investments in technology and the profitability of the five largest Brazilian banks between 2009 and 2018.
Theoretical framework: Through correlation analysis and panel data regression, the impact of technology investment on Return on Assets (ROA) was specifically assessed.
Design/methodology/approach: Despite the growth in investment in banking technology, the level of disclosure by publicly traded companies in Brazil is still limited, with few details disclosed in corporate reports about the amounts invested, of the types investments made, the expected return and the returns already obtained with previous investments. This disclosure is influenced by factors such as company size and profitability.
Findings: In the present study, a positive relationship was identified between investment in T.I and Return on Assets (ROA) of the banks analyzed and, therefore, the presence of a profitability paradox was not found.
Originality/value: There was a positive relationship between investment in IT and performance. There was a significant positive correlation at 5% between IT investments and financial performance, given by the relationship between profit before depreciation and total sales. The regression analysis found that an increase in IT investments raised the company's financial performance (Beta = 0.204 and p <0.1). The increase in the share of IT investments in operating expenses increased the Return on Assets by 0.039 percentage points.
Research, Practical & Social implications: Gain knowledge in the management of banking organizations in order to guide in the decision-making about technological investments that should be made.
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