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The Impact of E- Banking on Commercial Banks’ Performance in Namibia

Journal: International Journal of Economics and Financial Research (Vol.4, No. 10)

Publication Date:

Authors : ; ;

Page : 313-321

Keywords : Interbank settlement system; Cheques; Electronic funds transfer; Return on investment.;

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Abstract

This paper examines the impact of e-banking on commercial banks' performance in Namibia using an error correction modelling and granger causality test for the period 2012M1 to 2015M8. The advent of the internet has resulted in paradigm shifts in the banking industry towards electronic banking to create a competitive edge over rivals. Although this rapid development of information technology has made some banking tasks more efficient and cheaper, there are concerns that technological investments are taking a larger share of bank's resources. The finding reports that return on investment is significantly driven by interbank settlement systems, electronic funds transfer and cheques, with an adjustment of 32 percent per month. The direction of causality test reveals a unidirectional causality from return on investment to interbank settlement system and cheques. This indicates that an increase in the return on investment is likely to enhance innovations and development. The study also found a bidirectional causality between the volume of electronic funds transfer and return on investment. Policy implications emanating from this study suggest that stable macroeconomic conditions that enhance return on investment are good stimulant to drive innovations and technology that will ultimately increase economic development.

Last modified: 2018-11-06 18:29:19