Initial Trust Perceived Risk and the Adoption of Internet Banking

INITIAL TRUST, PERCEIVED RISK, AND THE ADOPTION OF INTERNET BANKING
Kyu Kim University of Cincinnati U.S.A. Inha University Korea Bipin Prabhakar University of Cincinnati U.S.A.
Abstract
Studies on the adoption of business-to-consumer e-commerce have not simultaneously considered trust and risk as important determinants of adoption behavior. Further, trust in information technology has not been addressed to a great extent in the context of e-commerce. This research explicitly encompasses the electronic channel and the firm as objects to be trusted in e-commerce. Our conceptual model leads us to believe that trust in the electronic channel and perceived risks of e-commerce are the major determinants of the adoption behavior. Based on the social network theory and the trust theory, determinants of trust in the electronic channel are included in the research model. This research is expected to provide both theoretical explanations and empirical validation on the adoption of e-commerce. We will also be able to offer specific recommendations on marketing strategies for practitioners, regarding the adoption of Internet banking. Keywords: Trust, perceived risks, electronic commerce, Internet banking

1. INTRODUCTION
Although the number of users of the Internet has increased significantly over the past decade, only a small fraction of those users have made actual purchases over the Internet. The failure of the Internet as a retail distribution channel has been attributed to the lack of trust consumers have in the electronic channel (E-channel) and in the Web merchants (Stewart 1999). Currall and Judge (1995) defined trust as an individual’s reliance on another party under conditions of dependence and risk. Considering that risk is a function of the probability that a hazard arises and the consequences of the hazard (Schneider 1998), an individual’s trusting behavior depends on the nature of the consequences. In the context of high-consequence systems such as Internet

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