Is the internet delivery channel changing banks' performance? The case of Spanish banks
In spite of the conspicuous use of the Internet as a delivery channel, there is a relative dearth of empirical studies that provide a quantitative analysis of the impact of the Internet on banks´ financial performance. This paper attempts to fill this gap by identifying and estimating the impact of the adoption of a transactional web site on financial performance using a sample of 72 commercial banks operating in Spain over the period 1994-2002. The impact on banks´ performance of transactional web adoption takes time to appear. The adoption of the Internet as a delivery channel involves a gradual reduction in overhead expenses (particularly, staff, marketing and IT). This effect is statistically significant after one and a half years after adoption. The cost reduction translates into an improvement in banks´ profitability, which becomes significant after one and a half years in terms of ROA and after three years in terms of ROE. The paper also concludes that the Internet is being used as a complement to, rather than a substitute for, physical branches.
|Date of creation:||Sep 2006|
|Contact details of provider:|| Web page: http://www.bde.es/|
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- W. Scott Frame & Lawrence J. White, 2004.
"Empirical Studies of Financial Innovation: Lots of Talk, Little Action?,"
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American Economic Association, vol. 42(1), pages 116-144, March.
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- Bauer, Keldon & Hein, Scott E., 2006. "The effect of heterogeneous risk on the early adoption of Internet banking technologies," Journal of Banking & Finance, Elsevier, vol. 30(6), pages 1713-1725, June.
- Richard J. Sullivan, 2000. "How has the adoption of Internet banking affected performance and risk in banks?," Financial Industry Perspectives, Federal Reserve Bank of Kansas City, issue Dec, pages 1-16. Full references (including those not matched with items on IDEAS)
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