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Internet banking and performance

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  • Stephen K. Callaway

Abstract

Purpose - The purpose of this paper is to provide an empirical study demonstrating the impact of internet banking, specifically the traffic rank and reach of the web site, on bank performance. Design/methodology/approach - The current study measures the impact of web site rank, percent of total internet users, and number of external links, using data from Alexa.com on bank performance, measured by deposits per branch, net income, return on assets, noninterest income to earning assets, and noninterest expense to earning assets, using data reported from the FDIC. Findings - Results show some support for the importance of web site traffic rank and reach. Specifically, the percent of total internet users and the number of external links were related to both domestic deposits and total global deposits per branch. Moreover, traffic rank and reach were related to net income and noninterest income to earning assets. Research limitations/implications - One limitation of this study is that it did not examine web site quality or e‐service quality directly. Originality/value - The paper demonstrates that greater web site traffic is associated with a greater ability to find new, alternative sources of revenue beyond traditional loans, but that spending more on developing the web site does not necessarily mean the ability to spend less on traditional branch overhead. As such, this paper has value for bank managers and researchers alike.

Suggested Citation

  • Stephen K. Callaway, 2011. "Internet banking and performance," American Journal of Business, Emerald Group Publishing Limited, vol. 26(1), pages 12-25, April.
    • Handle: RePEc:eme:ajbpps:v:26:y:2011:i:1:p:12-25
    DOI: 10.1108/19355181111124070
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    References listed on IDEAS

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    1. Van den Poel, Dirk & Leunis, Joseph, 1999. "Consumer Acceptance of the Internet as a Channel of Distribution," Journal of Business Research, Elsevier, vol. 45(3), pages 249-256, July.
    2. Ralph L. Keeney, 1999. "The Value of Internet Commerce to the Customer," Management Science, INFORMS, vol. 45(4), pages 533-542, April.
    3. Reynolds, Stephen E. & Ratanakomut, Somchai & Gander, James, 2000. "Bank financial structure in pre-crisis East and Southeast Asia," Journal of Asian Economics, Elsevier, vol. 11(3), pages 319-331, December.
    4. Rocco Ciciretti & Iftekhar Hasan & Cristiano Zazzara, 2009. "Do Internet Activities Add Value? Evidence from the Traditional Banks," Journal of Financial Services Research, Springer;Western Finance Association, vol. 35(1), pages 81-98, February.
    5. van Riel, A.C.R. & Liljander, V.M. & Lemmink, J.G.A.M. & Streukens, A.C.P., 2003. "Boost customer loyalty with online support: the case of mobile telecoms providers," Research Memorandum 014, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    6. DeYoung, Robert & Lang, William W. & Nolle, Daniel L., 2007. "How the Internet affects output and performance at community banks," Journal of Banking & Finance, Elsevier, vol. 31(4), pages 1033-1060, April.
    7. Richard J. Sullivan, 2000. "How has the adoption of Internet banking affected performance and risk in banks?," Financial Industry Perspectives, Federal Reserve Bank of Kansas City, issue Dec, pages 1-16.
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    Cited by:

    1. Vaughan, Liwen & Yang, Rongbin, 2013. "Web traffic and organization performance measures: Relationships and data sources examined," Journal of Informetrics, Elsevier, vol. 7(3), pages 699-711.
    2. Tariq Abbasi & Hans Weigand, 2017. "The Impact of Digital Financial Services on Firm's Performance: a Literature Review," Papers 1705.10294, arXiv.org.

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