An Exploratory Econometric Analysis of Shared Electronic Banking Network Adoption

36 Pages Posted: 15 Oct 2008

See all articles by Robert J. Kauffman

Robert J. Kauffman

Singapore Management University; Singapore Management University - School of Information Systems

Yu-Ming Wang

Independent

Date Written: August 1993

Abstract

What are the determinants of early interorganizational system (IOS) adoption?This paper focuses on a specific kind of IOS -- shared electronic banking networks -- andemploys an economic approach that views adoption and diffusion in terms of cost andbenefit. We attempt to identify firm characteristics that are likely to influence theperceived business value of network membership and develop specific hypotheses that canbe tested empirically using historical data in a realistic setting. We undertake anexploratory econometric analysis of the adoption of Yankee 24, a large shared electronicbanking network in the northeastern United States. Using Bass' analytical diffusionmodel, we categorize Yankee 24 network members into earlier and later adopters.Probit models are estimated to assess the impact of explanatory variables on sharedelectronic banking network adoption. The number of branch offices operated by a bank,its total demand deposits, and the proportion of its total deposits accounted for bydemand deposits are found to be important predictors of earlier adoption. We find thatthe number of branch offices operated by a bank, a proxy for the size of its proprietarynetwork, has a negative impact on early adoption, which contradicts the common wisdomthat a large firm size is a prerequisite for adoption of technological innovations.

Suggested Citation

Kauffman, Robert J. and Wang, Yu-Ming, An Exploratory Econometric Analysis of Shared Electronic Banking Network Adoption (August 1993). NYU Working Paper No. 2451/14261, Available at SSRN: https://ssrn.com/abstract=1284882

Robert J. Kauffman (Contact Author)

Singapore Management University ( email )

Li Ka Shing Library
70 Stamford Road
Singapore 178901, 178899
Singapore
65-6828-929 (Phone)

Singapore Management University - School of Information Systems ( email )

80 Stamford Road
Singapore, 178902
Singapore

Yu-Ming Wang

Independent

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