Digitalization and Business Model: The Case of European Banks

The objective of this paper is to study the impact that internet banking and business models have on the performance and reduction of bank branches. The dataset is composed of European banks for the period 2011 to 2016. The methodology used is that of the instrumental variables. According to BankFoc...

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Bibliographic Details
Published in:The ICFAI journal of bank management 2019-08, Vol.18 (3), p.7-31
Main Authors: Di Febo, Elisa, Angelini, Eliana
Format: Article
Language:English
Subjects:
Balance sheets
Banking industry
Branch banking
Business models
Cluster analysis
Commercial banks
Community banks
Competition
Cost control
Digital technology
Electronic banking
Financial services
Interest income
Internet
Literature reviews
Macroeconomics
Mobile commerce
Performance evaluation
Profitability
Profits
Retail banking
Savings banks
Studies
Variables
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Summary:The objective of this paper is to study the impact that internet banking and business models have on the performance and reduction of bank branches. The dataset is composed of European banks for the period 2011 to 2016. The methodology used is that of the instrumental variables. According to BankFocus database, the banks are of three different business models: commercial banks, cooperative banks and savings banks. The results show different behaviors of each business model for both the analyses. While the "Commercial bank" has a negative relationship with the variable of the Net Interest Income and branches, the "Cooperative bank" has a positive impact. The cooperative banks have shown that they are able to bring banking and financial services to places whose small size or the insufficient presence of production units did not justify the cost of a branch. Moreover, their customers use internet banking only to conduct daily operations and they go in for branches for all operations like investments or trading.
ISSN:0972-6918