The Anatomy of Banks’ IT Investments: Drivers and Implications

Kosha Modi, Nicola Pierri, Yannick Timmer, and Maria Soledad Martinez Peria

♦ Using a newly compiled measure, this paper studies the determinants and implications of US banks’ information technology (IT) investments. Exposure to fintech competition and novel economies of scale are important drivers of the six-fold increase in IT investments observed over two decades. Further analyses point towards significant implications of banks’ IT investments for both monetary policy transmission to lending and financial inclusion of low income borrowers.

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