Environmental impact of online banking: positive externalities on fuel consumption and greenhouse gas emission

Abstract

This study estimates the amount of fuel saved, and reduced greenhouse gas emissions, as the positive externalities of online banking along with marginal external cost of traditional banking which can be removed by employing online banking. The data were collected through interviewing a sample of 400 SMEs' owner/managers from the UAE free zones and to estimate the externalities a benefit transfer method was employed. The results show considering even if all the vehicles used are fuel efficient and low-emission, if all SMEs in the UAE free trade zones utilized online banking services, the fuel consumption will reduce by about 1,143,250 liters/year. the greenhouse gas emission by about 16,706 kg/year, and in sum the external costs of traditional banking removed by online banking will be equal to about $6,554,232 per year.