Impact of Social Networking Sites on Financial Performance: A Case Study of Indian Banks

17 Pages Posted: 10 May 2017

See all articles by Dr. Pooja Malhotra

Dr. Pooja Malhotra

Kurukshetra University - Dyal Singh College

Date Written: May 10, 2017

Abstract

The paper examines the presence and usage of Social Networking Sites particularly Facebook by banks in India. It primarily focuses on establishing the impact of Social networking sites on financial performance of banks in India. The data for this study is drawn from a survey of Facebook pages of 47 banks during the period of Feb-March 2015. The data set is limited to the banks that are operating as commercial banks as on March end 2014. Finally, a panel data of 47 commercial banks (Domestic only) turned out to be the sample of the study over the period 2012-2014. Independent sample t-test is used to find differences in the profile of banks that have Facebook pages and banks that do not and multiple regression is applied to find the impact of Facebook presence on profitability. The results show that of the banks observed, only 48.9 percent had their official Facebook page. The results of Independent sample t-test found several significant differences in the profile of banks that have Facebook pages and banks that do not. On an average, Facebook user banks are more profitable, rely less on traditional source of financing i.e. deposits, have higher asset quality in terms of lower NPA ratio and higher proportion of their income from non-traditional activities, although having higher expenses for fixed assets than Non-Facebook banks. Hence, Facebook user banks have shown a superior financial performance. However, the multiple regression results reveal that the profitability and having Facebook presence does not have any significant association.

Keywords: Banking, Social Media, Social Networking Sites, Facebook, performance, India

JEL Classification: G20, G21, O35, L25

Suggested Citation

Malhotra, Pooja, Impact of Social Networking Sites on Financial Performance: A Case Study of Indian Banks (May 10, 2017). Available at SSRN: https://ssrn.com/abstract=2965888 or http://dx.doi.org/10.2139/ssrn.2965888

Pooja Malhotra (Contact Author)

Kurukshetra University - Dyal Singh College ( email )

Dyal Singh College
Karnal
India

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