Network Externalities and Shared Electronic Banking Network Adoption

32 Pages Posted: 23 Oct 2008

See all articles by James McAndrews

James McAndrews

Wharton Financial Institutions Center

Robert J. Kauffman

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

Date Written: July 1993

Abstract

A unique data set is used to examine the determinants of membership in theYankee 24 shared Automated Teller Machine (ATM) network. Recent work suggeststhat the presence of demand side network externalities influences the decisionto join a network. A model is constructed in which characteristics of the bankand the market affect the value of the network externality. A hazard functionis estimated to gauge the strength of these various influences in determiningnetwork membership. The results accord with the theoretical model and show thatthe size of the existing network and the number of expected locations in thenetwork, proxied by the number of branches in a bank's market, are both stronginfluences on network adoption that are external to the individual bank.

Suggested Citation

McAndrews, James and Kauffman, Robert J., Network Externalities and Shared Electronic Banking Network Adoption (July 1993). NYU Working Paper No. IS-93-37, Available at SSRN: https://ssrn.com/abstract=1288431

James McAndrews

Wharton Financial Institutions Center ( email )

2306 Steinberg Hall-Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104
United States
9176090086 (Phone)
19104 (Fax)

Robert J. Kauffman

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

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