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Strategic online banking adoption

Author

Listed:
  • Hernández-Murillo, Rubén
  • Llobet, Gerard
  • Fuentes, Roberto
Abstract
In this paper we study the determinants of banks' decisions to adopt a transactional website for their customers. Using a panel of commercial banks in the United States for the period 2003-2006, we show that although bank-specific characteristics are important determinants of banks' adoption decisions, competition also plays a prominent role. The extent of competition is related to the geographic overlap of banks in different markets and their relative market share in terms of deposits. In particular, banks adopt online banking services earlier in markets where their competitors have already adopted this technology. This paper is one of the first to construct local banking markets using the geographic market definitions delimited by the CASSIDI® Database compiled at the Federal Reserve Bank of St. Louis.

Suggested Citation

  • Hernández-Murillo, Rubén & Llobet, Gerard & Fuentes, Roberto, 2010. "Strategic online banking adoption," Journal of Banking & Finance, Elsevier, vol. 34(7), pages 1650-1663, July.
    • Handle: RePEc:eee:jbfina:v:34:y:2010:i:7:p:1650-1663
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Duration models Technological adoption Online banking Competition;

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies

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