Abstract
Banks are increasingly using online social media to engage with their existing and potential customers; however, the use of technology can both strengthen and weaken these ‘virtual’ relationships. We analyse the adoption of online social media for 151 Italian banks and test how it affected bank profitability in 2013–2016. Although the adoption rate is lower than what is required by customers, and banks’ popularity on online social media is poor, we find that the effects of online social media vary. In particular, the presence and popularity of banks on Facebook negatively affect their profitability, whereas their presence on YouTube and in interactions on LinkedIn increases bank performance.
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- 1.
Manski (1995) suggests three basic categories of reasons why we might observe behavioural imitation within social networks. The first is a correlated effect, in which individuals in the same group tend to behave similarly because they face similar environments or they self-select into a given social network. The second category is a contextual effect, in which the propensity for a given type of behaviour varies with the background characteristics of the people in a social network. The third category is an endogenous effect.
- 2.
The report provides the following statistics: 70% of consumers have visited online social media sites to obtain information; 49% of these consumers have made a purchase decision based on the information they found through online social media sites; 60% said they were likely to use online social media sites to pass along information to others online; and 45% of those who searched for information via online social media sites engaged in word-of-mouth.
- 3.
It has been estimated that the number of banks with a presence on the most popular platform, Facebook, is still very low, at only about 60% (Miranda et al. 2013).
- 4.
The authors propose a new instrument called Facebook Assessment Index (FAI), which evaluates the essential information on a firm’s Facebook page.
- 5.
We retrieved social data for banks from the list of banks ‘Albo delle banche’ by Banca d’Italia (https://infostat.bancaditalia.it).
- 6.
Facebook: https:\\facebook.com; LinkedIn: https:\\linkedin.com; Twitter: https:\\twitter.com; Instagram: https:\\instagram.com; YouTube: https:\\youtube.com.
- 7.
Specifically, Sociograph (https://sociograph.io), a tool for understanding how many people are interacting with Facebook groups and Facebook pages, and Likealyzer (https://likealyzer.com), a free tool by Meltwater for an overview of information on Facebook.
- 8.
A company page may exist on LinkedIn even if somebody from the organization did not create it. LinkedIn may automatically generate it when a member adds that organization as work experience on his or her LinkedIn profile or when a job is posted on LinkedIn for that organization.
- 9.
Orbis Bank Focus is a new database of banks worldwide. The information is sourced by Bureau van Dijk from a combination of annual reports, information providers and regulatory sources. Orbis Bank Focus currently contains detailed information on 43,000 banks (28,000 US and 15,000 non-US), including six years’ history for listed banks and four years’ history for unlisted banks.
- 10.
Stata is an integrated statistical software package that provides tools for data analysis, data management and graphics. It was created in 1985 by StataCorp.
- 11.
For more about random-effects models, see Allison (2009).
- 12.
He argues that ‘if you can show that social media is a less expensive way to measure public opinion, make friends and influence people, than you can have a larger share of budget next time around’.
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Acknowledgements
This work was supported by the ‘Polo Scientifico Didattico Studi sull’Impresa a Vicenza’ (project ‘#BIT Business_Innovation_and_digital_Transformation’).
All errors and opinions expressed in this chapter are exclusively the authors’ responsibility.
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Giaretta, E., Chesini, G. (2019). ‘Share this pic!’: A Picture of the Adoption of Online Social Media by Italian Banks. In: Gualandri, E., Venturelli, V., Sclip, A. (eds) Frontier Topics in Banking. Palgrave Macmillan Studies in Banking and Financial Institutions. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-16295-5_7
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