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Federal Reserve Bank of Richmond
Working Paper
Internet banking: an exploration in technology diffusion and impact
Richard J. Sullivan
Zhu Wang
Abstract

This paper studies the diffusion and impact of a cost-saving technological innovation—Internet banking. Our theory characterizes the process through which the innovation is adopted sequentially by large and small banks, and how the adoption affects bank size distribution. Applying the theory to an empirical study of Internet banking diffusion among banks across 50 U.S. states, we examine the technological, economic and institutional factors governing the process. The empirical findings allow us to disentangle the interrelationship between Internet banking adoption and change in average bank size, and explain the variation in diffusion rates across geographic regions.


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Richard J. Sullivan & Zhu Wang, Internet banking: an exploration in technology diffusion and impact, Federal Reserve Bank of Richmond, Working Paper 13-10, 2013.
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