'Banking' on the Internet: Does Internet Banking Really Improve Bank Performance?

30 Pages Posted: 24 Jan 2012

See all articles by Mingfeng Lin

Mingfeng Lin

Scheller College of Business, Georgia Institute of Technology

Henry C. Lucas

University of Maryland - Robert H. Smith School of Business

Joseph Bailey

University of Maryland

Date Written: October 18, 2011

Abstract

Internet banking represents an important innovation in the banking industry, yet empirical analyses of how it affects bank performance remain rare. Using a comprehensive dataset of U.S. banks between 2003 and 2008, we combine propensity-score matching and difference-in-differences methods to study how the adoption of Internet banking affects bank performance. Contrary to common wisdom and several previous studies, we find only modest evidence that Internet banking adoption improves bank performance. In fact, the adoption of Internet banking actually results in worse performance for many banks. Additional analyses suggest that younger banks and banks that are earlier adopters are more likely to enjoy the benefits of Internet banking.

Keywords: Internet banking, adoption, innovation, propensity score, difference-in-differences

Suggested Citation

Lin, Mingfeng and Lucas, Henry C. and Bailey, Joseph, 'Banking' on the Internet: Does Internet Banking Really Improve Bank Performance? (October 18, 2011). Available at SSRN: https://ssrn.com/abstract=1989838 or http://dx.doi.org/10.2139/ssrn.1989838

Mingfeng Lin (Contact Author)

Scheller College of Business, Georgia Institute of Technology ( email )

United States

Henry C. Lucas

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States

Joseph Bailey

University of Maryland

College Park
College Park, MD 20742
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
786
Abstract Views
3,690
rank
37,794
PlumX Metrics