Does IT standardization help to boost cost and profit efficiency? Empirical evidence from German savings banks

This paper investigates the impact of IT standardization on bank performance based on apanel of 457 German savings banks over the period from 1996 to 2006. We measure ITstandardization as the fraction of IT expenses for centralized services over banks' total ITexpenses. Bank efficiency, in turn, is measured by traditional accounting performanceindicators as well as by cost and profit efficiencies that are estimated by a stochastic frontierapproach. Our results suggest that IT standardization is conducive to cost efficiency. Therelation is positive and robust for small and medium-sized banks but vanishes for very largebanks.[...]