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The interaction between face-to-face and electronic delivery: the case of the Italian banking industry

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Author Info

  • Emilia Bonaccorsi di Patti

    ()
    (Bank of Italy, Economic Research Department)

  • Giorgio Gobbi

    ()
    (Bank of Italy, Economic Research Department)

  • Paolo Emilio Mistrulli

    ()
    (Bank of Italy, Economic Research Department)

Abstract

We empirically investigate the relevance of demand-side complementarity between electronic and traditional provision of banking services. Since no systematic data on prices for the two types of services is available, it is not possible to estimate cross-elasticities of demand. We resort to two indirect tests. The first test is based on estimating the relationship between branches and the diffusion of e-banking services in local markets, controlling for individual bank and market characteristics employing new data for Italian banks referring to 1998-2001. We find that banks expanded relatively more in the e-business in those local markets where they had relatively fewer branches, with the exclusion of markets where the banks were chartered. The second test is based on measuring the impact of the joint provision of banking services - electronically and at traditional branches - on banksÂ’ revenues per customer. We estimate a non-standard revenue function that relates revenues from asset management, brokerage and payment services to the share of customers employing e-banking, given the total number of bank customers. Our results show that a high share of e-customers is associated with a reduction in revenues per customer. This evidence suggests that banks did not extract substantial consumer surplus from the joint provision of electronic services and traditional services at the branch. We interpret the results of both our test as not consistent with the hypothesis of complementarity between stores and e-commerce in the banking industry.

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Bibliographic Info

Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 508.

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Date of creation: Jul 2004
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Handle: RePEc:bdi:wptemi:td_508_04

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Web page: http://www.bancaditalia.it
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Keywords: commercial banks; e-banking; electronic transactions; store proximity;

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References

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  1. Cannari Luigi & D'Alessio G., 2002. "La distribuzione del reddito e della ricchezza nelle regioni italiane," Rivista economica del Mezzogiorno, Società editrice il Mulino, issue 4, pages 809-848.
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  9. Stijn Claessens & Thomas Glaessner & Daniela Klingebiel, 2002. "Electronic Finance: Reshaping the Financial Landscape Around the World," Journal of Financial Services Research, Springer, vol. 22(1), pages 29-61, August.
  10. Furst, Karen & Lang, William & Nolle, Daniel, 2001. "Internet banking in the U.S.: landscape, prospects, industry implications," Journal of Financial Transformation, Capco Institute, vol. 2, pages 45-52.
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Cited by:
  1. Monteforte, Libero, 2007. "Aggregation bias in macro models: Does it matter for the euro area?," Economic Modelling, Elsevier, vol. 24(2), pages 236-261, March.
  2. Guido De Blasio, 2006. "Does the Internet Kill the Distance? Evidence From Navigation, E-Commerce, and E-Banking," ERSA conference papers ersa06p440, European Regional Science Association.
  3. Corrocher, Nicoletta, 2006. "Internet adoption in Italian banks: An empirical investigation," Research Policy, Elsevier, vol. 35(4), pages 533-544, May.

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