Facebook Adoption in Indian Banks: An Empirical Investigation

Abstract

In this article, we try to identify the determinants of adoption of social media, in particular Facebook, among the Indian scheduled commercial banks. We have employed the survival analysis technique that studies the conditional probability of adoption of social media over time. The Kaplan–Meier nonparametric survival technique is used to study the nature of social media adoption by the Indian banks. Employing Cox’s proportional hazard (CPH) regression model, we have tried to assess the effect of explanatory variables on the adoption hazard rate, that is, joining Facebook. It appears that private sector banks are keen to join Facebook than public sector banks. The empirical analysis suggests that banks with higher non-interest income, intermediation cost and return on assets are inclined to adopt the technological innovations rapidly. The bank with greater ATM coverage is more likely to join Facebook. Medium/small-sized banks tend to be faster in joining Facebook. Banks with higher non-performing assets (NPAs) are yet to join Facebook. However, the number of branches is not associated with joining Facebook.

Determining Risk Factors that Diminish Asset Quality of Indian Commercial Banks

“…It is expected that banks with efficient cost management may spend more to hire skilled managerial personnel to improve the bank’s profitability. Further, efficient banks tend to adopt new technological innovation even though it may increase operating cost in the short term but in long run they have the relatively higher productivity (Swami et al, 2018). Thus, our results support the ‘Bad management’ hypothesis which is consistent with previous studies (Berger & DeYoung, 1997; Dhananjaya, 2019; Louzis et al, 2012; Podpiera & Weill, 2008).…”

“…Usually, more efficient banks have higher ROA thus they are more equipped in preventing and managing NPLs. In the present macroeconomic environment, most of the public-sector banks have higher NPAs and that might be forcing them not to invest in new technological innovation (Swami et al, 2018). However, these banks cannot afford to overlook the benefits of investment in new technological and financial innovation in improving profitability of banks in the long run.…”

“…It is expected that banks with efficient cost management may spend more to hire skilled managerial personnel to improve the bank's efficiency. Further, efficient banks tend to invest in new technological innovation even though it may increase operating cost in the short term but in long run they have the relatively higher productivity (Swami, Nethaji, & Sharama, 2018). In this respect, it is presumed that there is negative association between asset quality and bank's efficiency.…”

Bankers’ Perspective on Social Media Banking: A Study With Special Reference to Select Indian Banks

“…The results found positive effects on bank financial performance by having more revenue, increased loan portfolio and less customer acquisition costs since Social Media interaction on banks with customers was established (Mutero, 2014). Swami et al (2018) investigated the Facebook adoption rate in Indian Banks by considering explanatory variables such as Return on Assets (ROA) or Equity (ROE), Bank ownership and non-interest income. They concluded that banks with more non-interest income and ROA have a higher rate of adaptability concerning technological innovations and Facebook adoption than other banks.…”

A Frequency Assessment of Prevalent Prevention Strategies in order to Manage Banks’ NPAs in MSME Loans

“…Customers' expectations and their relationships with banks are changing quickly, Capgemini (2017) says, as a result of the emergence of social media platforms like Facebook and Twitter during the past few decades ,more individuals use social media (2017). Consumers now more than ever anticipate banks to provide services through these channels (Swami et. Al., 2018).…”