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The Role of Advertising in Commercial Banking

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  • Örs, Evren
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    Abstract

    I use a new Call Reports data item to revisit the role of advertising in US commercial banking. I examine how banks' advertising varies with the deposit market structure and whether bank profitability is influenced by advertising. My analysis addresses the endogeneity of market structure and advertising variables using instrumental variables. I find that banks advertise more with increasing market concentration, whereas banks with larger market shares and size advertise less. I also find that advertising has a positive and economically significant impact on bank profitability. These results suggest that advertising is an important aspect of bank competition.

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    Bibliographic Info

    Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5461.

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    Date of creation: Jan 2006
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    Handle: RePEc:cpr:ceprdp:5461

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    Keywords: depository institutions; market structure; non-price competition;

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    Cited by:
    1. Robert Tanton & Paul Williamson & Ann Harding, 2014. "Comparing Two Methods of Reweighting a Survey File to Small Area Data," International Journal of Microsimulation, Interational Microsimulation Association, vol. 7(1), pages 76-99.
    2. Cathal O'Donoghue & Karyn Morrissey & John Lennon, 2014. "Spatial Microsimulation Modelling: a Review of Applications and Methodological Choices," International Journal of Microsimulation, Interational Microsimulation Association, vol. 7(1), pages 26-75.

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