The interaction between face-to-face and electronic delivery: the case of the Italian banking industry
AbstractWe 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 InfoPaper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 508.
Date of creation: Jul 2004
Date of revision:
commercial banks; e-banking; electronic transactions; store proximity;
Find related papers by JEL classification:
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
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