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Internet banking: an exploration in technology diffusion and impact

  • Richard J. Sullivan
  • Zhu Wang

This paper studies the diffusion and impact of a cost-saving technological innovation—Internet banking. Our theory characterizes the process through which the innovation is adopted sequentially by large and small banks, and how the adoption affects bank size distribution. Applying the theory to an empirical study of Internet banking diffusion among banks across 50 U.S. states, we examine the technological, economic and institutional factors governing the process. The empirical findings allow us to disentangle the interrelationship between Internet banking adoption and change in average bank size, and explain the variation in diffusion rates across geographic regions.

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Paper provided by Federal Reserve Bank of Richmond in its series Working Paper with number 13-10.

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Date of creation: 2013
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Handle: RePEc:fip:fedrwp:13-10
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