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Household switching behavior at depository institutions: evidence from survey data

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Abstract

This article presents descriptive findings from new survey data on households' decisions to change or remain with their providers of checking or savings accounts. The data show that the distribution of household tenure is wide, and that about a third of households have never changed depository institutions. The primary reason reported for changing banks is a household relocation; other reasons are customer service and price factors. Customer service and location are the most frequently cited reasons for remaining with a bank. The importance of location and mobility supports previous survey evidence that the local area is the appropriate market for competitive analysis in banking. The findings presented here are consistent with earlier studies showing that population migration increases competitive pressure on firms and therefore should mitigate the anticompetitive effects of bank mergers.

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  • Elizabeth K. Kiser, 2002. "Household switching behavior at depository institutions: evidence from survey data," Finance and Economics Discussion Series 2002-44, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgfe:2002-44
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    Cited by:

    1. Céline Gondat-Larralde & Erlend Nier, 2006. "Switching costs in the market for personal current accounts: some evidence for the United Kingdom," Bank of England working papers 292, Bank of England.
    2. Ron Borzekowski & K. Kiser Elizabeth & Ahmed Shaista, 2008. "Consumers' Use of Debit Cards: Patterns, Preferences, and Price Response," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(1), pages 149-172, February.
    3. M. Girotti & R. Meade, 2017. "U.S. Savings Banks' Demutualization and Depositor Welfare," Working papers 639, Banque de France.
    4. Paul Edelstein & Donald P. Morgan, 2006. "Local or state? Evidence on bank market size using branch prices," Economic Policy Review, Federal Reserve Bank of New York, vol. 12(May), pages 15-25.
    5. Robert DeYoung & Tara N. Rice, 2004. "How do banks make money? the fallacies of fee income," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 28(Q IV), pages 34-51.
    6. Elizabeth Kiser, 2002. "Predicting Household Switching Behavior and Switching Costs at Depository Institutions," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 20(4), pages 349-365, June.
    7. Dick, Astrid A., 2008. "Demand estimation and consumer welfare in the banking industry," Journal of Banking & Finance, Elsevier, vol. 32(8), pages 1661-1676, August.
    8. John R. Walter & Patricia E. Wescott, 2008. "Antitrust analysis in banking : goals, methods, and justifications in a changed environment," Economic Quarterly, Federal Reserve Bank of Richmond, vol. 94(Win), pages 45-72.
    9. Viral V. Acharya & Hyun Song Shin & Tanju Yorulmazer, 2011. "Crisis Resolution and Bank Liquidity," The Review of Financial Studies, Society for Financial Studies, vol. 24(6), pages 2166-2205.
    10. ÖRS, Evren, 2006. "The Role of Advertising in Commercial Banking," CEPR Discussion Papers 5461, C.E.P.R. Discussion Papers.
    11. Tanju Yorulmazer, 2014. "Literature review on the stability of funding models," Economic Policy Review, Federal Reserve Bank of New York, issue Feb, pages 3-16.
    12. AKM Rezaul Hossain, 2010. "Branch location choice: Do lenders discriminate?," Economía, Instituto de Investigaciones Económicas y Sociales (IIES). Facultad de Ciencias Económicas y Sociales. Universidad de Los Andes. Mérida, Venezuela, vol. 35(30), pages 11-55, july-dece.
    13. Deuflhard, Florian, 2018. "Quantifying inertia in retail deposit markets," SAFE Working Paper Series 223, Leibniz Institute for Financial Research SAFE.
    14. Jason Allen & H. Evren Damar & David Martinez-Miera, 2016. "Consumer Bankruptcy, Bank Mergers, and Information," Review of Finance, European Finance Association, vol. 20(4), pages 1289-1320.
    15. Noriko Inakura & Satoshi Shimizutani, 2010. "Deposit insurance and depositor discipline: direct evidence on bank switching behaviour in Japan," Applied Economics, Taylor & Francis Journals, vol. 42(26), pages 3401-3415.
    16. Allen N. Berger & Astrid A. Dick, 2007. "Entry into Banking Markets and the Early‐Mover Advantage," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(4), pages 775-807, June.

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    Bank mergers; Banks and banking - Location;

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