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  • An Empirical Analysis of Factors that Influence the Adoption of Internet

    Banking in China: A Case Study of Zhengzhou

    A thesis

    submitted in partial fulfilment

    of the requirements for the Degree of

    Master of Commerce and Management


    Lincoln University


    Lu (Nancy) Zheng

    Lincoln University, Canterbury, New Zealand


  • ii

    Abstract of a thesis submitted in partial fulfilment of the requirements for the Degree

    of M. C. M.

    An Empirical Analysis of Factors that Influence the Adoption of

    Internet Banking in China: A Case Study of Zhengzhou

    By Lu (Nancy) Zheng

    The developments in information technology and telecommunications have set in

    motion an electronic revolution in todays banking industry including Chinas

    banking sector. This in turn results new delivery channels for banking products and

    services such as Automatic Teller Machine (ATM), telephone banking, cable

    television banking, Personal computer banking (PC), and Internet banking. Internet

    banking has become one of the most popular banking adopted by consumers. The

    evolution of Internet banking benefits both the banks and their customers, and most

    banks have been using it as one of their distribution channels. Benefits of the internet

    banking to banks include generating additional revenue, improving customer service,

    extending marketing, and increasing cost saving. For consumers, Internet banking

    means convenience, but there is an increasing risk exposure to consumers in regard to

    internet-based services and the growing importance of offering consumer support

    services such as security to mitigate security risk exposure. This research investigates

    the factors that affect consumers adoption of Internet banking services in Zhengzhou,

    China. These factors include personal factors, services quality factors, price factors,

    service product factors, situational factors, perceived risk factors, computer illiterate

  • iii

    factors, etc. This research also provides an understanding of the specific factors that

    affect the consumers decision whether or not to adopt Internet banking.

    Keywords: Internet banking, China, Banking, Telecommunication

  • iv


    First of all, I would like to express my deep appreciation to my main supervisor Dr

    Christopher Gan a respectable, responsible and resourceful scholar, who abundantly

    assistance, especially in data collection and analysis of the research findings. Thank

    you to my associate supervisor, Mr. Michael D. Clemes, who had read and re-read my

    work repeatedly. Thanking them for all the patience, valuable guidance, and

    perspectives throughout the research. Without their exceptional support and

    encouragement, I could not have completed my thesis.

    Thanks and love in abundance to my parents, who provided much support, both

    financial and emotional. Thanks for their endless love and support that guided me

    through the hard times when I was staying away from home.

    I would like also thank all my friends who had assisted and supported me while

    writing my thesis. I would like to thank Helen, Annie and George, who assisted me on

    the statistical methodology analysis and data collection process. My appreciation also

    goes to postgraduate fellows and staff in the Commerce division for their support and


  • v

    Table of Contents Abstract ii

    Acknowledgement iv

    Table of Contents v

    List of Tables ix

    List of Figures xi

    List of Appendices xii

    Chapter 1: Introduction 1

    1.1 Introduction and Evolution of Electronic Banking 1

    1.2 The Nature of Internet Banking 6

    1.3 Research Justification 10

    1.4 Research Problem Statement 12

    1.5 Research Objectives 14

    1.6 Research Contribution 15

    1.7 Structure of the thesis 15

    Chapter 2: Literature Review 17

    2.1 Introduction 17

    2.2 Perceived Security Factor 23

    2.3 The Internet Experience Factor 26

    2.4 Marketing Exposure Factor 28

    2.5 Internet Skills Factor 29

    2.6 Web Design/Features Factor 31

    2.7 Reliability Factor 33

    2.8 Internet Prestige Factor 34

    2.9 Demographic Characteristics 35

    Chapter 3: Research Hypotheses and Model 37

    3.1 Introduction 37

    3.2 Research Objectives 37

    3.3 Limitations of Adoption Internet Banking in China 37

    3.4 Factors that influwncing Adoption of Internet Banking in China 38

  • vi

    3.5 Hypotheses Relating to Research Objective One and Two 40

    3.5.1 Perceived Security 40

    3.5.2 Internet Experience 41

    3.5.3 Marketing Exposure 42

    3.5.4 Internet Skills 43

    3.5.5 Web Design/Features 43

    3.5.6 Reliability 44

    3.5.7 Internet Prestige 45

    3.6 Hypotheses Relating to Research Objective Three 45

    3.6.1 Demographic Characteristics 45

    3.7 The Theoretical Research Model 49

    Chapter 4: Research Methodology 50

    4.1 Introduction 50

    4.2 Sample Method 50

    4.3 Sample Size 51

    4.4 Questionnaire Development 51

    4.5 Questionnaire Format 52

    4.6 Pre-testing Procedures 52

    4.7 Construct Measurement 53

    4.8 Overview of Quality Choice Model 53

    4.9 Quality Choice Applications 54

    4.10 The Theoretical Framework 57

    4.10.1 The Empirical Framework 57

    4.10.2 Sensitivity Analysis 62

    4.11 Additional Statistical Analysis 63

    4.11.1 One-way ANOVA Appication 63

    4.11.2 the parametric Two Independent Sample T-test Application 64

    Chapter 5: Results and Discussion 66

    5.1 Introduction 66

    5.2 Descriptive Statistics 66

    5.3 Assessment of the Data Set 67

    5.3.1 Statistical Assumptions for Factor Analysis 68 Examination of the Correlation Matrix 68

  • vii Inspection of the Anti-Image Correlation Matrix 68 Bartletts Test of Sphericity 69 The Kaiser-Meyer-Olkin Measure of Sampling Adequacy 69

    5.3.2 Factor Analysis Results 69 The Latent Roots Criterion 69 The Scree Test 70 Rotation Results 70 Factor Interpretation 71

    5.3.3 Assessment of Summated Scales 71 Cross-Tabulation 71 Content Validity 71 Dimensionality 72 Reliability of the Construct Measurenment 72

    5.3.4 Statistical Assumption for Logistic Regression Models 72 Outliers 72 Multicollinearity 73 Data Level 73

    5.4 Results Pertaing to Research Objective One (Hypothesis 1 through 7) 74

    5.5 Results Pertaing to Research Objectives Two 77

    5.6 Results Pertaing to Research Objective Three (Hypothesis 8 through 14) 78

    5.6.1 Age Relating to Internet Banking Adoption 81

    5.6.2 Marital Sataus Relating to Internet Banking Adoption 81

    5.6.3 Education Relating to Internet Banking Adoption 81

    5.6.4 Occupation Relating to Internet Banking Adoption 82

    5.6.5 Income Relating to Internet Banking Adoption 82

    Chapter 6: Conclusions and Implications 83

    6.1 Introduction 83

    6.2 Conclusions Pertaining to Research Objective One 83

    6.3 Conclusions Pertaining to Research Objective Two 86

    6.4 Conclusions Pertaining to Research Objective Three 86

    6.5 Theoretical Implications 87

    6.6 Managerial Implications 88

    6.7 Limitations and Avenues for Future Research 94

  • viii

    6.8 Conclusion 95

    References 98

  • ix

    List of Tables

    Table 5.1: Descriptive Statistic of Demographic Characteristics 114

    Table 5.2: The Correlation Matrix for Internet Banking Adoption 116

    Table 5.3: Anti-image Correlation 120

    Table 5.4: KMO and Bartlett's Test 124

    Table 5.5: Factor Extraction 125

    Table 5.6: Rotated Component Matrix with VARIMAX Rotation 127

    Table 5.7: Pattern Matrix with OBLIMIN Rotation 129

    Table 5.8: Cross-tabulation of Gender 131

    Table 5.9: Cross-tabulation of Age 132

    Table 5.10: Cross-tabulation of Marrial Status 133

    Table 5.11: Cross-tabulation of Education 134

    Table 5.12: Cross-tabulation of Occupation 135

    Table 5.13: Cross-tabulation of Income 136

    Table 5.14: Cross-tabulation of time of Computer Use 137

    Table 5.15: The Reliability Test for the Measures of Internet Banking

    Adoption Choice in China 138

    Table 5.16: Pearson Correlation Matrix 140

    Table 5.17: Logistic Regression Results (Influencing Factors and Demographic

    Characteristics on Internet Banking Adoption) 75

    Table 5.18: Hypotheses 1 to 7 Test Results 77

    Table 5.19: Marginal Effects of Customers Adoption of Internet banking 77

    Table 5.20: Hypotheses 8 through 13 Test Results 79

    Table 5.21: T-Test: Internet Banking Adoption Factor Relating to Gend


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