Internet Banking Vs Conventional Banking in terms of Profitability Index: Case study of Saudi Arabia

Abstract

ABSTRACT: The purpose of this paper is to examine the internet banking system with the conventional banking system in Saudi Arabia. The idea of this study is to evaluate the variation performance of both the system, for this we will use the data of 7 local banks for a time period from 2005-2011, which are currently providing both of these services, we will use the data from the financial statements of these banks to find out the most commonly used ratio to empirically evaluate the performance of these systems. We use the Dummy Variable for those years which the bank had not started using the internet service, this way we can see how much it changed .The study gives us a clear idea that the internet banking adoption is clearly improving the Return on Equity (ROE) in terms of profitability, and also the capitalization is having an positive impact on the profitability.

Keywords: Internet Banking, Conventional Banking.

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ÖZ: Bu calışmanın amacı internet bankacılığının Suudi Arabistan bankacılık sisteminde uygulannması ve karlılık uzerinde etkileridir. Bankacılık sisteminin gelişimini 7 tane ticari bankayı ele alarak 2005-2011 yılları arasındaki performansları bilanco ve gelir gider tabloları incelenmiştir. Performanslar ampirik calışmlara sonucunda irdelenmiş ve bankaların internet adaptasyonun banka performanslarını ne şekilde etkilediği incelenmiş ve internet kullanımının banka buyukluğu ve karlılıkla doğru orantılı olduğu gorulmektedir.

Anahtar: internet bankaciligi, Ticari Bankacilik.