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

Ignacio Hernando and María Nieto ()
Additional contact information
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)

Downloads: (external link)
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)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:0624

Access Statistics for this paper

More papers in Working Papers from Banco de España Contact information at EDIRC.
Bibliographic data for series maintained by Ángel Rodríguez. Electronic Dissemination of Information Unit. Research Department. Banco de España ().