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The Impact of ATM Surcharges on Large versus Small Banks: Is There a Switching Effect?

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Author Info

  • Nadia Massoud

    (University of Alberta)

  • Anthony Saunders

    (New York University)

  • Barry Scholnick

    (University of Alberta)

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    Abstract

    This paper uses a unique database to test the effect of ATM surcharges on larger versus smaller banks. Only nonbank ("foreign") users of ATMs pay ATM surcharges. Customers thus face incentives to switch accounts from smaller banks to larger banks in order to avoid high ATM surcharges. We find that, after we control for other bank factors, higher ATM surcharges result in a greater market share of deposits of larger banks and a lower market share for smaller banks, results that are consistent with customer switching. However, smaller banks can positively affect their market share by establishing larger ATM networks.

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    Bibliographic Info

    Article provided by University of Chicago Press in its journal Journal of Business.

    Volume (Year): 79 (2006)
    Issue (Month): 4 (July)
    Pages: 2099-2126

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    Handle: RePEc:ucp:jnlbus:v:79:y:2006:i:4:p:2099-2126

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    Web page: http://www.journals.uchicago.edu/JB/

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    Cited by:
    1. Hasan, Iftekhar & Schmiedel, Heiko & Song, Liang, 2009. "Return to retail banking and payments," Working Paper Series 1135, European Central Bank.
    2. Donze, Jocelyn & Dubec, Isabelle, 2008. "Paying for ATM usage : good for consumers, bad for banks ?," MPRA Paper 10892, University Library of Munich, Germany.
    3. Robert D. J. Anderson & John Ashton & Robert S. Hudson, 2013. "The Influence of Product Age on Pricing Decisions: An examination of bank deposit interest rate setting," Working Papers 13014, Bangor Business School, Prifysgol Bangor University (Cymru / Wales).

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