Consumer Uptake of Internet Banking, Endogenous Market Structure and Regional Integration in Europe

Bruce Lyons and Minyan Zhu
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Bruce Lyons: Centre for Competition Policy and School of Economics, University of East Anglia

No 2019-04, Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) from Centre for Competition Policy, University of East Anglia, Norwich, UK.

Abstract: This paper examines how market structure influences the early introduction and consumer uptake of a digital service that is a convenient alternative to traditional service delivery. Digital provision also has "extended geographic reach" and "lower sunk costs" as compared with bricks-and-mortar service provision. We further examine how these affect market structure. Internet banking provides an important example that also allows us to separate regional integration and national concentration dimensions of market structure. We develop an econometric model of the effects of market structure on the introduction and consumer uptake of internet banking. We estimate using panel data for all EU Member States and find that both concentration and regionalisation bring these forward. Next, we examine how consumer uptake of the digital product then begins to impact on banking market structure. We find a substantial de-concentrating effect in large non-regionalised markets and indirect evidence of integration in previously regionalised markets. This is consistent with internet banking having enhanced competition in both integrated markets and, despite little change in national concentration, also in previously regionalised markets.

Keywords: Internet Banking; Digital Markets; Endogenous Market Structure; Market Integration; Consumer Diffusion (search for similar items in EconPapers)
JEL-codes: F15 G21 L11 L81 O33 (search for similar items in EconPapers)
Date: 2019-04-25
New Economics Papers: this item is included in nep-com, nep-ict and nep-pay
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Working Paper: Consumer Uptake of Internet Banking, Endogenous Market Structure and Regional Integration in Europe (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:uea:ueaccp:2019_04

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