An empirical investigation of the value-relevance of internet web traffic and bank revenue on Arab banks’ comparative efficiency performances
Date of Award
Master of Business (Management Information Systems)
School of Management
Faculty of Business and Law
Professor Craig Standing
This thesis empirically investigates comparative efficiency performances of the top Arab banksu sing Data Envelopment Analysis (DEA) and Principal Components Factor Analysis (PCFA). For the first time an attempt is made to use the volume of internet website tracking (as a proxy for internet banking) and revenue as output variables, to provide a signal for bank performances. The methodology highlights the importance of the ‘best practices’ associated with high efficiency performance measures of internet web traffic and revenue outputs. Cross-sectional data for the year 2008 is used to conduct the analysis.
Use of web statistics from Alexa.com provides a unique of source of non-financial information of Arab banks to link with revenue output to derive a performance indicator derived from the DEA output. Using PCFA as a means of a data reduction technique of DEA results provides a procedure to explore how much information can be extracted from the final DEA scores. The objective of PCFA is starting from a set of observed variables (DEA efficiencies scores obtained from various input/output combinations), to create a smaller set of independent variables that explain the correlations existing between the original variables. These new variables, the principal components, are in general, not observed, but they tend to have a meaning. Data collection reveals opacity and lack of consistency in official reporting. Results from the analysis of the sixty-two Arab banks clearly identify disparities exist between Arab banks’ comparative efficiency performances. The top technically efficient scoring banks were not necessarily the larger banks. Banks that were efficient were not necessarily profitable. Finally
no significant relationship was detected between large banks that are efficient at generating website visits are also efficient at generating revenues. Smaller banks reveal more empirical evidence of comparative efficiency performance towards generating website traffic output.
From a policy perspective, this study highlights the importance of encouraging increased
technical efficiency throughout the banking industry in the Arab world. The use of recently constructed and publically available web metrics now opens new avenues for future research involving internet banking within a background of developing banking technological awareness and competition. In addition, the unique data set provides a benchmark of individual Arab banks’ relative efficiency performances for present and future analyses to be undertaken.
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Budd, D. (2010). An empirical investigation of the value-relevance of internet web traffic and bank revenue on Arab banks’ comparative efficiency performances. Retrieved from http://ro.ecu.edu.au/theses/157