Journal Article

Technology Diffusion: The Case of Internet Banking

Abstract: Taking internet banking as an example, we study diffusion of cost-saving technological innovations. We show that the diffusion of internet banking follows an S-shaped logistic curve as it penetrates a log-logistic bank-size distribution. We test the theoretical hypothesis with an empirical study of internet banking diffusion among banks across fifty U.S. states. Using an instrument-variable approach, we estimate the positive effect of average bank size on internet banking diffusion. The empirical findings allow us to examine the technological, economic, and institutional factors governing the diffusion process and explain the variation in diffusion rates across geographic regions.

Keywords: Internet; Banking; Technology; Diffusion;

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Bibliographic Information

Provider: Federal Reserve Bank of Richmond

Part of Series: Economic Quarterly

Publication Date: 2020

Issue: 1Q

Pages: 19-40