Studying the Impact of Electronic Banking on Profitability of Selected Iranian Private Banks

In modern life¡ the information technology has bestowed upon stupendous impacts on banking industry¡ in toto. Hence¡ utilization of new technologies in banking system could be deemed de facto¡ as an inevitable task and as a result¡ all banks are supposed to employ the modern apparatus of payments system to attain the optimal level of satisfactions for their customers and acquire the plausible rate of profit¡ per se. In this paper¡ an attempt is made to inquisite about the effects of Electronic Banking on profitability of certain Iranian Private Banks for the period of 2006-2012. The statistical population of this study comprises 6 banks i.e. Eghtesad-e-Novin¡ Pasargad¡ Parsian¡ Sarmayeh¡ Saman and Karafarin bank thereto. Subsequently¡ we have exerted de jure¡ the Panel Data Method to test the Hypotheses and estimate the model. Similarly to preclude the phenomenon of spurious regression¡ which may occur due to existence of trend in explanatory variables¡ we have conducted the stationary test and Levin¡ Lin and Chu Test viz-a-viz applying logarithmic and differentiation techniques¡ Ipso facto. Furthermore¡ we have postulated that the Electronic Banking System designated three contraptions i.e. ATM¡ POS and PINPAD¡ and also have specified the dependent variables of the model as Profitability of Banks¡ Return on Assets and Return on Equities respectively. While correspondingly¡ we have assigned the Index of Market Concentration of Banks¡ Market Share of Banks¡ Size of Banks and Electronic Banking as independent variables¡ Sine qua non. The results prima facie¡ indicate that the impact of Electronic Banking on Profitability¡ Return on Assets and Return on Equities of Iranian selected Private Banks are statistically significant and positive¡ Sui generis.