Beethika Khan (Department of Economics, University of California, Berkeley)
Abstract
This paper tests whether consumer adoption of online banking is affected by the distance to one's bank branch. During the last decade, rapid diffusion of the Internet has dramatically changed the ways consumers conduct every-day businesses. An important trend in the rapid increase of Internet use among U.S. households is the use of the Internet for accessing financial accounts and paying bills. I estimate a logit model for online banking use with household level data from the U.S. for 1998 and 2001. In order to correct for the possible endogeneity of distance to one's bank, I use instrumental variables in a logit framework by following the control function approach suggested by Petrin and Train (2002). I find that distance to the closest bank branch does not affect the likelihood of online banking use by a household. The type of financial account that one has with her financial institution, however, is a significant predictor of online banking use, implying that households are likely to use the online provision more for some accounts than others. The results suggest that online channels may be viewed as a supplement to other more traditional channels. I also find that the impacts of various individual and bank-specific characteristics on online banking use have changed from 1998 to 2001. This is not surprising given the rapid diffusion of the Internet in the late 1990s, and the corresponding rise in the availability, acceptance and familiarity of the Internet as an additional business channel.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)