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Internet Banking

Author

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  • David VanHoose

Abstract

This paper reviews what economists have learned about Internet banking. The paper begins by surveying evidence regarding the fundamental motivations for banks to offer services via the Internet and for their customers to utilize the services. It considers the experience of and future prospects for so-called 'pure-play' Internet banks that conduct virtually all dealings with their customers via the Web. The paper next evaluates the current evidence on how Internet banking has affected the performances of traditional banking institutions, with a focus on whether the provision of banking services via the Web has mainly been felt on the revenue or expense side of banks’ income statements. Furthermore, it examines recent concerns about the possibility that deposits raised through Internet channels are potentially more susceptible to sudden withdrawals that could result in runs on banks. The paper concludes by summarizing the main points and considering future directions for research on this topic.

Suggested Citation

  • David VanHoose, 2009. "Internet Banking," NFI Policy Briefs 2009-PB-12, Indiana State University, Scott College of Business, Networks Financial Institute.
    • Handle: RePEc:nfi:nfipbs:2009-pb-12
    as

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    File URL: http://www.indstate.edu/business/sites/business.indstate.edu/files/Docs/2009-PB-12_VanHoose.pdf
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    References listed on IDEAS

    as
    1. Javier Delgado & Ignacio Hernando & María J. Nieto, 2007. "Do European Primarily Internet Banks Show Scale and Experience Efficiencies?," European Financial Management, European Financial Management Association, vol. 13(4), pages 643-671, September.
    2. Richard J. Sullivan & Zhu Wang, 2005. "Internet banking: an exploration in technology diffusion and impact," Payments System Research Working Paper PSR WP 05-05, Federal Reserve Bank of Kansas City.
    3. Rocco Ciciretti & Iftekhar Hasan & Cristiano Zazzara, 2009. "Do Internet Activities Add Value? Evidence from the Traditional Banks," Journal of Financial Services Research, Springer;Western Finance Association, vol. 35(1), pages 81-98, February.
    4. Gropp, Reint E. & Corvoisier, Sandrine, 2009. "Contestability, Technology and Banking," ZEW Discussion Papers 09-007, ZEW - Leibniz Centre for European Economic Research.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Internet Banking; Online Financial Services;

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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