The Effect of Information Systems on Bank Performance: A comparative study between Islamic and Commercial Banks in Jordan
This study aims to explore and analyze the most important reasons for decision making within the banking sector of Jordan, which, although extremely important, is largely absent in business literaturepertaining to Jordan. Essentially, the researcher poses two central questions: Does implementation of Information Systems (IS) impact on business performance Is there any difference in this impact between the two main groups of banks in Jordan; Islamic and Commercial? Two further questions are also investigated; the extent to which banks are applying IS, and whether there are differences in business performance due to individual bank characteristics,such as extent of capital reserves, the number of years it has been operating, and the type of bank.
Quantitative methodology has been used to collect and analyze data, which is comprised of 583 questionnaires. Various forms of analysis were employed to examine the research assumptions; independent and one-sample t-test, multiple regression analysis and ANOVA.
The study proposes the following conclusions:
- IS is applied by banks in Jordan; however, there is variation in application of equipment and software, with Commercial Banks exhibiting positive implementation and Islamic Banks negative implementation.
- The only significant positive effect of IS was on marketing performance.
- The relationship does not differ when a comparison between two samples is progressed.
- Economic performance of a bank is related to the sector (Commercial or Islamic) to which it belongs.
Alenezi, H., Tarhini, A., Alalwan, A., and Al-Qirim, N. (2017). Factors affecting the adoption of e-government in Kuwait: a qualitative study. Electronic Journal of e-Government, 15(2), 84-102.
Aljabli, S. (2012). The effect of information technology and customers knowledge management on customers relations in banks services sectors. Doctoral dissertation, Amman Arab university, Amman, Jordan.
Alnadari, M. (2016). Information system and its effect on decision making in banks sectors in Jordan, master thesis, Jordan University, Amman, Jordan.
Altamony, H., and Gharaibeh, A. (2017). The role of academic researcher to Mintzberg’s managerial roles. International Journal of Business Management and Economic Research, 8(2), 920-925.
Arezo, A. (2018). Factors influencing customers’ change of behaviors from online banking to mobile banking in Tejarat Bank, Iran. Journal of Organizational Change Management, 31(6), 1226-1233.
Awwad, M., Ali, D., and Agti, M. (2011). The impact of internal marketing on commercial banks' market orientation. International Journal of Bank Marketing, 29(4), 308-332.
Bajnaid, A., Elyas, T., and Veltri, G. (2018). Utilizing matrimonial web sites among Saudi users: an empirical study. Digest of Middle East Studies, 27(1), 1-30.
Cengiz, E., Hasan F., Baklaci, B., and Gökçe, T. (2014). Performance comparison of Islamic (participation) banks and commercial banks in Turkish banking sector. EuroMed Journal of Business, 9(2), 114-128.
David, P. (1995). Managing benefits from information technology. Information Management & Computer Security, 3(5), 29-35.
Donald, J., and Mark, K. (2010). Bank marketing investments and bank performance. Journal of Financial Economic Policy, 2(4), 326-345.
Hafid, A., and Bill, R. (2006). Defining information systems success in Canada. Information Management & Computer Security, 14(4), 300-311.
Hannan, K., Asim, N., Javed, I., Shahid, F., and Victor, C. (2018). Development of public sector information management systems: challenges and promising practices. Information Discovery and Delivery, 46(3), 184-195.
Hichem, H., and Kachtouli, S. (2014). Competitive conditions and market power of Islamic and conventional commercial banks. Journal of Islamic Accounting and Business Research, 5(1), 29-46.
Kabir, M., Benito, S., and Faisal, M. (2013). Impact of financial liberalization and foreign bank entry on Islamic banking performance. International Journal of Islamic and Middle Eastern Finance and Management, 6(1), 7-42.
Livio, C., Michele, G., and Musadaq, H. (2014). Decision making in choosing information systems: an empirical study in Jordan. VINE: The Journal of Information and Knowledge Management Systems, 44(2), 162-184.
Mark, C. (1998). Creating sustainable competitive advantage through marketing information system technology: a triangulation methodology within the banking industry. International Journal of Bank Marketing, 16(2), 80-89.
Min, Z., Xiande, Z., and Marjorie, L. (2018). Effects of absorptive capacity, trust and information systems on product innovation. International Journal of Operations & Production Management, 38(2), 493-512.
Ming, L., Chun‐Hong, L., Jiang, J., and Linjun, H. (2005). Internet banking: strategic responses to the accession of WTO by Chinese banks. Industrial Management & Data Systems, 105(4), 429-442.
Mukhopadhyay, Y., Kekre, S., and Kalathur, S. (1995). Business value of information technology: a study of electronic data interchange. MIS Quarterly, 9(2), 137-156.
Obeidat, O., Tarhini, A., and Aqqad, N. (2019). The relationship among emotional intelligence, conflict management styles, and job performance in Jordanian banks. International Journal of Human Resources Development and Management, Forthcoming.
Rahmatollah, F., and Ebrahim, A. (2006). Added value of information and information systems: a conceptual approach. Library Review, 55(2), 132-147.
Roger, J. (2001). Hardware/software avionic system performance (HASP): a design tool for a virtual prototyping system. Aircraft Engineering and Aerospace Technology, 73(4), 345-359.
Saheer, A., and Chris, W. (2003). Jordan and ICT‐led development: towards a competition state?. Information Technology & People, 16(1), 93-110.
Salma, L., and Younes, B. (2015). Banks’ stability-efficiency within dual banking system: a stochastic frontier analysis. International Journal of Islamic and Middle Eastern Finance and Management, 8(4), 472-490.
Suhaimi, M., Hussin, H., and Mustaffa, M. (2007). Information systems outsourcing: motivations and the implementation strategy in a Malaysian bank. Business Process Management Journal, 13(5), 644-661.
Sun, M., Siew, F., Younghoon, C., and Myeong-Cheol, P. (2016). Analysis of the dynamic broadband technology competition: implications for national information infrastructure development. Industrial Management & Data Systems, 116(6), 1223-1241.
Suraya, A., and Abdul Rahim, A. (2012). The efficiency of Islamic and conventional commercial banks in Malaysia. International Journal of Islamic and Middle Eastern Finance and Management, 5(3), 241-263.
Talal, H., and Abu Khadra, H. (2008). Investigating perceived security threats of computerized accounting information systems: an empirical research applied on Jordanian banking sector. Journal of Economic and Administrative Sciences, 24(1), 41-67.
Tarhini, A., Al-Busaidi, K., Bany Mohammed, A., and Maqableh, M. (2017). Factors influencing students' adoption of e-learning: a structural equation modeling approach. Journal of International Education in Business, 10(2), 164-182.
Todd, A. (2009). A framework for innovation road mapping in microfinance information systems, in Todd A. Watkins, Karen Hicks (ed.) Moving Beyond Storytelling: Emerging Research in Microfinance (Contemporary Studies in Economic and Financial Analysis, Volume 92), Emerald Group Publishing Limited, pp. 251-269.
Uma, G., and Collins, W. (1997). The impact of information systems on the efficiency of banks: an empirical investigation. Industrial Management & Data Systems, 97(1), 10-16.
Umesh, G., and Gupta, M. (2011). Deciding the level of information systems outsourcing: proposing a framework and validation with three Indian banks. Journal of Enterprise Information Management, 25(1), 28-59.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.