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A Principal Component Analysis of Digital Banking Development in Taiwan

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  • Mei-Mei Lin
  • Fu-Hsiang Kuo

Abstract

In Taiwan, the digitalization of banks has imparted a future trend and a national financial technology (FinTech) policy. This paper aims to study which factors will affect the promotion of digital banking amongst digital accounts. Categorically, we applied the principal components analysis (PCA) method to analyze and identify the main factors of digital banking development. In addition, this study used three years of data from 2017 to 2020 since the data were relatively comprehensive and included all the large financial holding companies (15 in total) in Taiwan. The empirical findings can briefly be summarized as follows: a bank that wants to promote digital accounts must start with a credit card since that is what digital finance must be bound to. They also need to let people know that digital accounts have many advantages, such as no deposit limits or interest-free cross-bank withdrawals. There are a few crucial factors that need to be considered, including the number of free transfers, the card in force, active cards, and the number of free withdrawals. If banks effectively promote and attract people to apply for digital accounts, it could strongly contribute to the development of digital banking in Taiwan. Â JEL classification numbers: C45, G10.

Suggested Citation

  • Mei-Mei Lin & Fu-Hsiang Kuo, 2023. "A Principal Component Analysis of Digital Banking Development in Taiwan," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 13(4), pages 1-2.
    • Handle: RePEc:spt:apfiba:v:13:y:2023:i:4:f:13_4_2
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    References listed on IDEAS

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    1. Simran Jit Kaur & Liaqat Ali & M. Kabir Hassan & Md Al-Emran, 2021. "Adoption of digital banking channels in an emerging economy: exploring the role of in-branch efforts," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 26(2), pages 107-121, June.
    2. David Mhlanga, 2020. "Industry 4.0 in Finance: The Impact of Artificial Intelligence (AI) on Digital Financial Inclusion," IJFS, MDPI, vol. 8(3), pages 1-14, July.
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    Cited by:

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    2. I Gede Nyoman Mindra Jaya & Said Mirza Pahlevi & Argasi Susenna & Lidya Agustina & Dita Kusumasari & Yan Andriariza Ambhita Sukma & Dewi Hernikawati & Anggi Afifah Rahmi & Anindya Apriliyanti Pravitas, 2024. "Framework for Monitoring the Spatiotemporal Distribution and Clustering of the Digital Society Index of Indonesia," Sustainability, MDPI, vol. 16(24), pages 1-23, December.

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    More about this item

    Keywords

    Financial technology; Digital banking; Digital account; Principal components analysis.;
    All these keywords.

    JEL classification:

    • C45 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Neural Networks and Related Topics
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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