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Banking competition and cost stickiness

Author

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  • Lee, Eunsuh
  • Kim, Chaehyun
  • Leach-López, Maria A.

Abstract

In this paper, we examine how banking competition affects non-financial firms’ cost stickiness. Using the Interstate Banking and Branching Efficiency Act (IBBEA) as an exogenous shock to banking competition, we find that banking competition increases non-financial firms’ cost stickiness. In addition, we find that banking competition increases cost stickiness of non-financial firms by intensifying competitive pressure and improving the availability of credit. Overall, this paper contributes to existing literature by documenting the effect of banking competition on cost behavior and the determinants of cost stickiness.

Suggested Citation

  • Lee, Eunsuh & Kim, Chaehyun & Leach-López, Maria A., 2021. "Banking competition and cost stickiness," Finance Research Letters, Elsevier, vol. 41(C).
    • Handle: RePEc:eee:finlet:v:41:y:2021:i:c:s1544612320316731
    DOI: 10.1016/j.frl.2020.101859
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    References listed on IDEAS

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    Cited by:

    1. Sun, Yu & Gong, Hui, 2023. "Firm financialization and cost stickness behavior," Finance Research Letters, Elsevier, vol. 57(C).
    2. Li, Tongxia & Lu, Chun & Chen, Zhihua, 2023. "The unintended consequence of collateral-based financing: Evidence from corporate cost behavior," Journal of Contemporary Accounting and Economics, Elsevier, vol. 19(1).
    3. Chen, Yufeng & Xu, Jing, 2023. "Digital transformation and firm cost stickiness: Evidence from China," Finance Research Letters, Elsevier, vol. 52(C).
    4. Li, Tongxia & Lu, Chun, 2022. "Stakeholder orientation and cost stickiness: Evidence from a natural experiment," Finance Research Letters, Elsevier, vol. 47(PA).
    5. Mitha Dwi Restuti & Lindawati Gani & Elvia R. Shauki & Lianny Leo, 2022. "Does Managerial Ability Lead to Different Cost Stickiness Behavior? Evidence from ASEAN Countries," IJFS, MDPI, vol. 10(3), pages 1-21, July.

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