Internet Banking: An Exploration in Technology Diffusion and Impact

36 Pages Posted: 10 Aug 2013

See all articles by Richard J. Sullivan

Richard J. Sullivan

Federal Reserve Bank of Kansas City

Zhu Wang

Federal Reserve Banks - Federal Reserve Bank of Richmond

Date Written: August 8, 2013

Abstract

This paper studies the diffusion and impact of a cost-saving technological innovation — Internet banking. Our theory characterizes the process through which the innovation is adopted sequentially by large and small banks, and how the adoption affects bank size distribution. Applying the theory to an empirical study of Internet banking diffusion among banks across 50 U.S. states, we examine the technological, economic and institutional factors governing the process. The empirical findings allow us to disentangle the interrelationship between Internet banking adoption and change in average bank size, and explain the variation in diffusion rates across geographic regions.

Keywords: technology diffusion, bank size distribution, Internet banking

JEL Classification: G20, L10, O30

Suggested Citation

Sullivan, Richard J. and Wang, Zhu, Internet Banking: An Exploration in Technology Diffusion and Impact (August 8, 2013). FRB Richmond Working Paper No. 13-10, Available at SSRN: https://ssrn.com/abstract=2307696 or http://dx.doi.org/10.2139/ssrn.2307696

Richard J. Sullivan

Federal Reserve Bank of Kansas City ( email )

1 Memorial Dr.
Kansas City, MO 64198
United States
(816) 881-2372 (Phone)

HOME PAGE: http://kansascityfed.org/home/subwebnav.cfm?level=3&theID=10970&SubWeb=10782

Zhu Wang (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

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