The impact of blockchain technology on operational efficiency: The case of asset management firms

Abstract

This study investigates whether the adoption of blockchain technology is associated with measurable differences in the operational efficiency of financial institutions, with a focus on banking and asset management. The study analyzes 20 banks across 2005 to 2024 through fixed-effects logistic regression for panel data to determine blockchain adoption effects on financial performance metrics. The study investigates blockchain implementation effects on financial performance through its impact on cost-to-income ratio (CIR) and return on assets (ROA) and return on equity (ROE) while loans-to-deposits ratio (LDR) serves as the control variable. The research findings demonstrate that financial institutions experience lower cost-to-income ratios after implementing blockchain technology. The main specification shows a negative relationship between ROE and adoption but this relationship becomes insignificant when using different estimation methods. The main analysis reveals no statistically significant relationship between return on assets (ROA) and adoption. The main specification does not demonstrate any significant relationship between ROA and adoption rates. The research findings receive support from stationarity tests and additional tests that include company-dummy OLS and year-dummy regressions. The year-dummy estimates demonstrate that financial institutions started adopting blockchain technology after 2015 because of an industry-wide trend rather than individual financial performance metrics. The study reveals managerial and regulatory effects while showing potential research paths for future studies.