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

Authors

1 Faculty of Economics, Department of Economics, University of Allameh Tabatabae’i, Tehran, Iran.

2 Department of Economics, University of Allameh Tabatabae’i, Tehran, Iran.

Abstract

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long with the development of electronic banking as a result of 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. In order 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 impression of E-banking development. Concentration is measured using Herfindahl-Hirschman index based on 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 the larger ones. Results also show that there is a positive, logical relationship between each bank’s portion of total deposits and development of Electronic banking.
 

Keywords