Journal of Banking & Finance Vol. 31 No. 4 2007
Is the Internet delivery channel changing banks’ performance? The case of Spanish banks
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.
- DOI
- 10.1016/j.jbankfin.2006.10.011
- Volume
- 31
- Issue
- 4
- Pages
- 1083-1099
- Language
- en
- Sources
- openalex crossref bibtex:phds-export.bib