Volume 13, Number 1, June 2018
| The Effects of Internet Banking on Financial Performance: Evidence from the East Asian Countries |
Abstract
In recent years, the rise and flourish of internet and e-commerce promoted Digital Finance development. As internet technology gradually mature, coupled with increasing internet popularity, consumer banking behaviors are shifting towards utilizing internet to process transactions. This study investigated the effect on internet banking on bank performance in the East Asian Region. Logistic regression models were established to determine potential variables that affected the likelihood of providing internet banking and the effect of implementing internet banking on financial data that would reflect bank’s profitability. The results show that banks who situated in more economically developed county, possessed higher return on shareholder equity are more inclined to develop internet banking. But with the development of online banking, growth rate of return on equity of banks would be negatively affected, due to the nature of limited potential growth of the banking sector in developed countries.
Keywords: Internet banking, Financial performance, Return on equity (ROE), Return on assets (ROA), Cash ratio
JEL Classification: C02, G21, G24