IT use and the competitiveness of small banks

Information management is a core process in banking, in particular when lending to small, opaquefirms. But while a more intensive use of information technology (IT) can enhance informationmanagement, it is also costly. Merely increasing IT expenditure may thus not be a panacea tooptimize information management. We use a unique dataset of universal banks that cater primarilyto small and medium enterprises to estimate a measure of optimal IT use and relate it to thecompetitiveness of banks.[...]