The New Banking Era: The Effects of the Digitalization on the Efficiency of Swedish Banks

University essay from Handelshögskolan i Stockholm/Institutionen för finansiell ekonomi

Abstract: In this thesis, the impact on the efficiency from the digitization of Swedish banks is investigated. Using two separate models, first the impact of digital development on the relative efficiency of the banks in the sample is evaluated. A set of input variables and output variables are used to measure the relative efficiency. Then the impact of digitization on the absolute efficiency is analyzed. The following variables related to digitization are included in the regression analysis: number of branches, number of employees, total assets, and dummy variables for the level of digitization. The results from the DEA model show that banks that have employed a digital strategy, and/or appointed a Chief Digital Officer or equivalent, are more efficient relative to other banks in the sample. The regression model results imply that digitization has a positive impact on the efficiency of Swedish banks. The conclusion is that the effects of the digitalization is positive on the efficiency of Swedish banks.

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