The Effect of Electronic Banking on Deposit Attraction and Market Concentration in Iran’s Banking Industry

Authors

Faculty of Economics, Allameh Tabataba'i University, Tehran, Iran

Abstract

Along with the development of electronic banking due to the rapid growth of information technology, many banking indices, including concentration, are affected. This influence is made among different variables, of which the amount of banks’ deposits and the level of deposit attraction are the most important. This study the influence of electronic banking on concentration in Iran’s banking industry, considering each bank’s portion of total deposit. To do this, using the annual data of the years 2006 to 2016 and in panel data form, along with descriptive-statistical analysis, bank concentration was studied under the impression of E-banking development. Concentration is measured using the Herfindahl-Hirschman index based on the deposit portion. Results indicate that small banks’ portion of deposits has flourished, and the concentration has decreased. The reason is that small banks use more electronic banking services than larger ones. Results also show a positive, logical relationship between each bank’s portion of total deposits and the development of Electronic banking.

Keywords

References

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Iranian Economic Review
Volume 24, Issue 2
May 2020
Pages 545-565

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