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Determinants and Outcomes of Internet Banking Adoption

Author Info

Listed author(s):
  • Mei Xue

    ()

    (Carroll School of Management, Boston College, Chestnut Hill, Massachusetts 02467)

  • Lorin M. Hitt

    ()

    (The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104)

  • Pei-yu Chen

    ()

    (Fox School of Business and Management, Temple University, Philadelphia, Pennsylvania 19122)

Registered author(s):

Abstract

This paper examines the drivers of adoption of Internet banking and the linkages among adoption drivers and outcomes (product acquisition, service activity, profitability, loyalty). We relate Internet banking adoption to customer demand for banking services, the availability of alternative channels, customers' efficiency in service coproduction ("customer efficiency"), and local Internet banking penetration. We find that customers who have greater transaction demand and higher efficiency, and reside in areas with a greater density of online banking adopters, are faster to adopt online banking after controlling for time, regional, and individual characteristics. Consistent with prior work, we find that customers significantly increase their banking activity, acquire more products, and perform more transactions. These changes in behavior are not associated with short-run increases in customer profitability, but customers who adopt online banking have a lower propensity to leave the bank. Building on these observations we also find that the adoption drivers are linked to the postadoption changes in behavior or profitability. Customers who live in areas with a high branch density or high Internet banking penetration increase their product acquisition and transaction activity more than Internet banking adopters in other regions. Efficient customers and those with high service demand show greater postadoption profitability. This paper was accepted by Sandra Slaughter, information systems.

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File URL: http://dx.doi.org/10.1287/mnsc.1100.1187
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Article provided by INFORMS in its journal Management Science.

Volume (Year): 57 (2011)
Issue (Month): 2 (February)
Pages: 291-307

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Handle: RePEc:inm:ormnsc:v:57:y:2011:i:2:p:291-307
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Keywords: Internet banking adoption; customer efficiency; network effects;

References listed on IDEAS
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Cited by:

  1. Mi Jin Noh & Kyung Tag Lee, 2016. "An analysis of the relationship between quality and user acceptance in smartphone apps," Information Systems and e-Business Management, Springer, vol. 14(2), pages 273-291, May.

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