Empirical Review

Regarding this paper there are various profound research dealing with the e-banking and their empirical analysis. The most important and relative ones emphasized in this study are discussed as follows.

According to the study of Halili, (2014) the paper illustrates the performance of internet baking in Turkey. There was a consideration of about 14 commercial and saving banks within a specified period of time from the year 1996 to the year 2010. The author was able to apply MARGIN, return on equity ( ROE),  and return on asset ( ROA) as variable performance. Based on this analysis a conclusion was made within the first year of adoption usually no any prevailing performance was positive since it takes at least two to three years to attain good performance. The result that emerged shows that the return on equity consists of positive results within the second year of adoption.  The return on asset also shows positive result though the variable is not significant.

Regarding the study of Husni Ali and Noor Mousa (2011) the Jordanian domestic banks are evaluated whereby they are considered to adopt e-baking services. Concerning this study there are three banks that were based on and they include: non internet services, early adopters concerned with e-banking services and the recent adopters of the e-banking services. The following were used in the study as profitability ratio, the Return on Equity, Return on Assets and the Margin of interest.  It was observed that there was on any effect of non-internet effect on Return on Equity while a significant effect exists in terms of the Return on Asset. Concerning the second type there was significance only on Margin since a period of less than two years is required in the recent adopters. Based on the last type of the bank where electronic banking services is considered there was no any significant profitability that was emerged within the whole period. In such a case study it is true that it takes more time for adoption of the e-baking services since every product takes a period of two to three years for a positive result to be seen.

Another empirical analysis was done by Pooja & Balwinder (2009) on online banking in India. According to these authors they ventured in 85 commercial banks both public and private ones within a given duration as from the year 1998 to the year 2006. Based on the study 10 financial performance was used where univariant analysis and multivariant analysis were applied. The aim of the authors was to determine the risk and performance related to online banking. They discovered that on the side of univariant analysis there is a hypothesis that exists on how the banking adoption operates in both the online and non -online banking related to 10 financial indicators. Concerning the results obtained internet banking consists of large size in terms of assets and employees. If the cost is lower the profitability, operating efficiency as well as financing internet banks results to a better performance. The internet banks are also regarded to have a lower net Non-Performing Assets if Diversification and Asset Quality are considered. On the other hand internet banking is expected to have lower cost of operation when it is implied in the category of Cost of Operation. Putting the information into consideration a conclusion is made according to the authors whereby the private have been proved to have lower costs as compared to public and early adopters which have higher costs, and this is attributed to the used costs when maintaining the adoption of online banking within physical branches. The other part of analysis is developed in order to prove the relationship that exists between offering internet banking as well as performance and risk using the variables that are depend such as Return on Equity, Return on Asset and the existence of the Non-Performing Asset. Conclusions are made concerning the variables that there is no any significance relationship that exists between the Return on Equity and Return on Asset with internet and performance. On the other hand there is a negative significance that exists between the Internet and the Return on Asset within the private banks and its sub category. There was a positive result of about 10 percent significance on the side of Return on Equity with the internet banking performance within the foreign banks. When it comes to Non-Performing Asset as the last dependent variable it shows a great result, whereby no risk increases with the internet banking but decreases any risk profile. This analysis proved that internet banking is becoming better as times goes when it is performed in a proper way.

According to the study carried out by Ozatac and Nwobodo (2011) on internet banking in the Northern Cyprus within the year 2004 to 2009 based on 22 retail banking. They applied the concept of Return on Equity and Return on Asset as dependent variables. They used various ratios within the study whereby the Credit Asset ratio of total credit to total asset was applied and Credit Debit ratio of the total deposits was also applied to test the relationship between internet banking and performance of various banks. The results that emerged with the model study proved that there is a low relationship that exists between the variables and multicolinearity among the variable did not exist. The conclusion draw from the study is the Credit Asset and Credit Debit ratios proved to give out the negative results on the relationship when the internet banking is used. Although, internet banking is seen to provide an increasing performance in various sectors, the authors emphasize that maybe the two ratios were not applied wisely during the study.

The comparative analysis that was carried out by Francesca & Peter (2008) is considered to be a good study because the study is based on evaluation of about four European countries such Spain, UK, Italy and Finland. The aim of the authors concerning the study is not only to embrace the relationship between performance and internet banking service relation, but also to bring out the differences and similarities within various banks that apply the online banking concept as well as those banks that integrate the purely online banking. During the study the analysis of Fuzzy cluster was applied to show the main differences that exists in terms of performance with the bank groups while other features were also used to dived them into groups, they found out that it is more trivial with the mixed banks of internet banking. The panel data applied within the study was from the year 1995 to the year 2004 where a total number of 46 banks were used. The concept of the fixed panel estimation emerged as a reason of heterogeneity unobserved across the banks that belongs to different states while the Return on Asset and Return on Equity was used as dependent variable. The result obtained by the authors based on the study was that there is no any difference that exists between the pure online banking and the mixed internet baking. Regarding the loan offering to members the pure online banking is not so keen when giving out the loan while the mixed the mixed banks are keen when it comes to that. As per the finding of authors the internet banks have a good performance in terms of the Return on Asset and the Return on Equity. As highlighted in the above statement it is difficult to differentiate the pure and mixed internet banking. When it comes to the performance aspect between the two the use of explanation difference has to be applied between the banks, more so the technology related to the ratios and the macro indicator has also to be used to bring out the differences. It was observed that due to increase of Information Technology department costs and personnel more of management is focused towards the online banking offering.

Another empirical analysis was done by Hernando and Niete (2006) in their study they used an Instrumental Variable concerned with the internet banking adoption dummy. They focused on 72 commercial banks of Spain within their study as from the year 1994 to the year 2000. The aim of their study was to prove that the adoptions of internet banking reduce any form of overhead expenses and the reduction of this cost leads to an increase of profitability in the banks. Concerning the model there is use of the same variable as the previous studies, but within this study we are focusing on two equations. The first equation is to know the effect of variables based on performance and the second one is to know the use of branch performance as a result of adoption of online banking. The six exogenous variables (HOUSEHOLD, FINACIAL GROUP, LISTED, URBAN, LARGE) are considered to be Instrumental Variables. In the second model the same Instrumental variables are applied. The study model where the Instrumental Variable is not applied the result obtained shows that the adoption of online banking has a positive significance regarding the Return on Asset and the Return on Equity. Addition to this, a significant cost is considered to be low after duration of one year of adoption if the estimation is in both. On the other hand more complete information on expenditure is given when it comes to Instrumental Variable and this expenditure significantly decreases within a period of one year or 12months. Efficiency improvement is evident in the first model of general expenses, while when it comes to the second model there is an increase in the number of branches due to adoption regarding to online baking within the first six months. This implies that the idea of adoption is more complementary issue and cannot be fully substituted for existence of the physical branches.

According to the study of Onay & Ozsoz (2012) they used a given data based on 18 deposit banks in Turkey, within the year 1990 to the year 2008 in the emerging market center. Their aim was to test that internet adoption has great negative effect when it comes on profitability within the first year of adoption and a positive significance on the idea of deposit and credit branch. Regarding to their model of study they applied some variables that were basic such as Interest Income, Branch deposit, Non-interest income, Branch credit and Branch profit. Lastly they applied four exogenous variables for the Internet dummy if the bank set is within the fourth quartile then the dummy is large, if the state of the bank is owned by the government, and foreign if the bank is truly foreign owned, while the bank is considered to be listed if it is listed on the foreign exchange. Concerning this study a conclusion was made that the performance of banking sector is regarded to be different in an emerging market since the adoption of online banking results to decrease in the banking profitability.

References

Özataç, N., Nwobodo, C.J (2011) “The Impact of Internet Banking on Bank’s Profitability: The Case Of North Cyprus.

Onay, C., Ozsoz, E., (2012) “The impact of Internet-Banking on Brick and Mortar Branches- The Case of Turkey”

Hernando, I., Nieto, M, J., (2006) “IS THE INTERNET DELIVERY CHANNEL CHANGING BANKS’ PERFORMANCE? THE CASE OF SPANISH BANKS”

Khrawish, A.H., Al-Sa’di, N.M.,(2011)“The Impact of E-Banking on Bank Profitability: Evidence from Jordan” ISSN: 1450-2889 Issue 13

Halili, R., 2014. The impact of Online Banking on Bank Performance.

Malhotra, P. and Singh, B., 2009. The impact of internet banking on bank performance and risk: The Indian experience. Eurasian Journal of Business and Economics, 2(4), pp.43-62.

Arnaboldi, F. and Claeys, P., 2008. Internet banking in Europe: a comparative analysis. Research Institute of Applied Economics, 8(11), pp.1-28

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