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| Author: | Hannan, T.H. Adams, R.M. |
| Title: | Consumer switching costs and firm pricing: evidence from bank pricing of deposit accounts |
| Journal: | Journal of Industrial Economics
2011 : JUN, VOL. 59:2, p. 296-320 |
| Index terms: | banking bank deposits accounts pricing customers |
| Language: | eng |
| Abstract: | We utilize extensive information considering bank deposit rates and area migration patterns to inspect pricing relationships implied by switching costs. We argue that, resulting from the trade-off between attracting new customers and exploiting old ones, banks offer higher deposit rates in areas attributed by more intensive in-migration. Furthermore, because greater out-migration implies a locked-in customer not being with the bank for as long, banks will offer lower deposit rates in areas exhibiting greater out-migration. Also, as this effect of out-migration logically depends on the extent of in-migration, a relationship exists. Evidence strongly supporting these relationships is found. |
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