Is the internet delivery channel changing banks' performance? The case of Spanish banks

Ignacio Hernando () and María Nieto ()
Additional contact information
Ignacio Hernando: Banco de España
María Nieto: Banco de España

No 624, Working Papers from Banco de España

Abstract: 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.

Keywords: commercial banks; internet banking; profitability; cost and income structure (search for similar items in EconPapers)
JEL-codes: G21 O32 O33 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2006-09
New Economics Papers: this item is included in nep-ban, nep-eff, nep-ict and nep-ino
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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http://www.bde.es/f/webbde/SES/Secciones/Publicaci ... o/06/Fic/dt0624e.pdf First version, September 2006 (application/pdf)

Related works:
Journal Article: Is the Internet delivery channel changing banks' performance? The case of Spanish banks (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:0624

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