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The Effect of New Technology in Payment Services on Banks' Intermediation

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  • Kjersti-Gro Lindquist

    (Central Bank of Norway)

Abstract

In many countries, payment services in banking have shifted from paper-based giro and check payments to electronic giro and debit card payments. This paper analyses the effect of this change in payment technology within a multiple-output framework using Norwegian bank level panel data. The dual approach with four variable inputs is applied, and the general model includes random coefficients to capture heterogeneity in the production technology across banks. The results show that the move towards electronic payment services has (i) decreased average costs, (ii) increased the economies of scale in the production of deposits more than in the production of loans, and (iii) affected input demand asymmetric. The input ratio between labour and both physical capital and materials have decreased.

Suggested Citation

  • Kjersti-Gro Lindquist, 2002. "The Effect of New Technology in Payment Services on Banks' Intermediation," 10th International Conference on Panel Data, Berlin, July 5-6, 2002 B3-2, International Conferences on Panel Data.
    • Handle: RePEc:cpd:pd2002:b3-2
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    Cited by:

    1. Khiaonarong, Tanai, 2003. "Payment systems efficiency, policy approaches, and the role of the central bank," Bank of Finland Research Discussion Papers 1/2003, Bank of Finland.
    2. Almas Heshmati, 2003. "Productivity Growth, Efficiency and Outsourcing in Manufacturing and Service Industries," Journal of Economic Surveys, Wiley Blackwell, vol. 17(1), pages 79-112, February.
    3. repec:zbw:bofrdp:2003_001 is not listed on IDEAS
    4. Tanai Khiaonarong, 2004. "Payment systems efficiency, policy approaches, and the role of the central bank," Finance 0405004, University Library of Munich, Germany.
    5. Khiaonarong, Tanai, 2003. "Payment systems efficiency, policy approaches, and the role of the central bank," Research Discussion Papers 1/2003, Bank of Finland.
    6. Humphrey, David B. & Vale, Bent, 2004. "Scale economies, bank mergers, and electronic payments: A spline function approach," Journal of Banking & Finance, Elsevier, vol. 28(7), pages 1671-1696, July.

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    More about this item

    Keywords

    Banking industry; Electronic payments; Technical change; Panel data;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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