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Technology Diffusion: The Case of Internet Banking


  • Richard J. Sullivan
  • Zhu Wang


Taking internet banking as an example, we study diffusion of cost-saving technological innovations. We show that the diffusion of internet banking follows an S-shaped logistic curve as it penetrates a log-logistic bank-size distribution. We test the theoretical hypothesis with an empirical study of internet banking diffusion among banks across fifty U.S. states. Using an instrument-variable approach, we estimate the positive effect of average bank size on internet banking diffusion. The empirical findings allow us to examine the technological, economic, and institutional factors governing the diffusion process and explain the variation in diffusion rates across geographic regions.

Suggested Citation

  • Richard J. Sullivan & Zhu Wang, 2020. "Technology Diffusion: The Case of Internet Banking," Economic Quarterly, Federal Reserve Bank of Richmond, issue 1Q, pages 19-40.
  • Handle: RePEc:fip:fedreq:88438
    DOI: 10.21144/eq1060102

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    Internet; Banking; Technology; Diffusion;


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