This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

The Role of Advertising in Commercial Banking

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Örs, Evren
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.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help file. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.cepr.org/pubs/dps/DP5461.asp
File Format: application/pdf
File Function:
Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

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

Download reference. The following formats are available: HTML, plain text, BibTeX, RIS (EndNote), ReDIF
Length:
Date of creation: Jan 2006
Date of revision:
Handle: RePEc:cpr:ceprdp:5461

Contact details of provider:
Postal: Centre for Economic Policy Research, 53--56 Great Sutton Street, London EC1V 0DG
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820

Order Information:
Email:

For technical questions regarding this item, or to correct its listing, contact: ().

Related research
Keywords: depository institutions market structure non-price competition

Find related papers by JEL classification:
D40 - Microeconomics - - Market Structure and Pricing - - - General
G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages
M37 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - Advertising

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Hannan, Timothy H., 1991. "Bank commercial loan markets and the role of market structure: evidence from surveys of commercial lending," Journal of Banking & Finance, Elsevier, vol. 15(1), pages 133-149, February. [Downloadable!] (restricted)
  2. Buxton, A J & Davies, S W & Lyons, B R, 1984. "Concentration and Advertising in Consumer and Producer Markets," Journal of Industrial Economics, Blackwell Publishing, vol. 32(4), pages 451-64, June. [Downloadable!] (restricted)
  3. Allen N. Berger & Loretta J. Mester, 1997. "Inside the Black Box: What Explains Differences in the Efficiencies of Financial Institutions?," Center for Financial Institutions Working Papers 97-04, Wharton School Center for Financial Institutions, University of Pennsylvania. [Downloadable!]
    Other versions:
  4. Paul S. Calem & Gerald A. Carlino, 1989. "The concentration/conduct relationship in bank deposit markets," Working Papers 89-26, Federal Reserve Bank of Philadelphia.
    Other versions:
  5. Franklin M. Fisher & John J. McGowan, 1979. "Advertising and Welfare: Comment," Bell Journal of Economics, The RAND Corporation, vol. 10(2), pages 726-727, Autumn. [Downloadable!] (restricted)
  6. Ors, Evren, 2004. "Postmortem on the Federal Reserve's Functional Cost Analysis Program: how useful was the FCA?," Review of Financial Economics, Elsevier, vol. 13(1-2), pages 121-148. [Downloadable!] (restricted)
  7. Santos, Rolando A, 1995. "Dynamics of Market Structure, Advertising and Profitability: A VAR Approach," Applied Economics, Taylor and Francis Journals, vol. 27(7), pages 631-34, July.
  8. 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.). [Downloadable!]
  9. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January. [Downloadable!] (restricted)
  10. John D. Wolken & Frederick W. Derrick, 1986. "Advertising, market power and non-price competition: evidence from commercial banking," Working Papers in Banking, Finance and Microeconomics 86-3, Board of Governors of the Federal Reserve System (U.S.).
  11. Pinho, Paulo Soares de, 2000. "The impact of deregulation on price and non-price competition in the Portuguese deposits market," Journal of Banking & Finance, Elsevier, vol. 24(9), pages 1515-1533, September. [Downloadable!] (restricted)
  12. Nicola Cetorelli, 1999. "Competitive analysis in banking: appraisal of the methodologies," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q I, pages 2-15. [Downloadable!]
  13. DeYoung, Robert & Hasan, Iftekhar, 1998. "The performance of de novo commercial banks: A profit efficiency approach," Journal of Banking & Finance, Elsevier, vol. 22(5), pages 565-587, May. [Downloadable!] (restricted)
  14. Becker, Gary S & Murphy, Kevin M, 1993. "A Simple Theory of Advertising as a Good or Bad," The Quarterly Journal of Economics, MIT Press, vol. 108(4), pages 941-64, November. [Downloadable!] (restricted)
  15. Nichols, Len M, 1985. "Advertising and Economic Welfare," American Economic Review, American Economic Association, vol. 75(1), pages 213-18, March. [Downloadable!] (restricted)
  16. Uri, Noel D, 1987. "A Re-examination of the Advertising and Industrial Concentration Relationship," Applied Economics, Taylor and Francis Journals, vol. 19(4), pages 427-35, April.
  17. Robert DeYoung & William Hunter & Gregory Udell, 2004. "The Past, Present, and Probable Future for Community Banks," Journal of Financial Services Research, Springer, vol. 25(2), pages 85-133, April. [Downloadable!] (restricted)
  18. Allen N. Berger & Timothy H. Hannan, 1987. "The price-concentration relationship in banking," Research Papers in Banking and Financial Economics 100, Board of Governors of the Federal Reserve System (U.S.).
    Other versions:
  19. Sutton, C J, 1974. "Advertising, Concentration and Competition," Economic Journal, Royal Economic Society, vol. 84(333), pages 56-69, March. [Downloadable!] (restricted)
  20. Stephen Martin, 1979. "Advertising, Concentration, and Profitability: The Simultaneity Problem," Bell Journal of Economics, The RAND Corporation, vol. 10(2), pages 639-647, Autumn. [Downloadable!] (restricted)
  21. Heggestad, Arnold A & Mingo, John J, 1976. "Prices, Nonprices, and Concentration in Commercial Banking," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 8(1), pages 107-17, February. [Downloadable!] (restricted)
  22. Robert DeYoung, 2000. "For how long are newly chartered banks financially fragile?," Working Paper Series WP-00-9, Federal Reserve Bank of Chicago. [Downloadable!]
  23. Corvoisier, Sandrine & Gropp, Reint, 2002. "Bank concentration and retail interest rates," Journal of Banking & Finance, Elsevier, vol. 26(11), pages 2155-2189, November. [Downloadable!] (restricted)
    Other versions:
  24. Strickland, Allyn D & Weiss, Leonard W, 1976. "Advertising, Concentration, and Price-Cost Margins," Journal of Political Economy, University of Chicago Press, vol. 84(5), pages 1109-21, October. [Downloadable!] (restricted)
  25. Nelson, Philip, 1974. "Advertising as Information," Journal of Political Economy, University of Chicago Press, vol. 82(4), pages 729-54, July/Aug.. [Downloadable!] (restricted)
  26. Hochman, Oded & Luski, Israel, 1988. "Advertising and Economic Welfare: Comment," American Economic Review, American Economic Association, vol. 78(1), pages 290-96, March. [Downloadable!] (restricted)
  27. Kohers, Theodor & Simpson, W Gary, 1981. "Concentration and Advertising in the United States Savings and Loan Industry," Applied Economics, Taylor and Francis Journals, vol. 13(1), pages 79-88, March.
  28. Demsetz, Harold, 1973. "Industry Structure, Market Rivalry, and Public Policy," Journal of Law & Economics, University of Chicago Press, vol. 16(1), pages 1-9, April.
  29. Carree, M.A., 2000. "The Evolution of the Russian Saving Bank Sector During the Transition Era," Research Paper ERS-2000-27-STR Revision_, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni. [Downloadable!]
  30. Lapp, John S, 1976. "Market Structure and Advertising in the Savings and Loan Industry," The Review of Economics and Statistics, MIT Press, vol. 58(2), pages 202-08, May. [Downloadable!] (restricted)
  31. Hasan, Iftekhar & Hunter, William Curt & MathisIII, Roswell E., 2000. "Promotional Expenditures, Market Competition, and Thrift Behavior," Journal of Business Research, Elsevier, vol. 50(2), pages 177-184, November. [Downloadable!] (restricted)
  32. Nelson, Phillip J, 1975. "The Economic Consequences of Advertising," Journal of Business, University of Chicago Press, vol. 48(2), pages 213-41, April. [Downloadable!] (restricted)
  33. Astrid A. Dick, 2006. "Nationwide Branching and Its Impact on Market Structure, Quality, and Bank Performance," Journal of Business, University of Chicago Press, vol. 79(2), pages 567-592, March. [Downloadable!]
Full references

Statistics
Access and download statistics

Did you know? The yearly budget of IDEAS is exactly $0: it relies entirely on volunteer work.

This page was last updated on 2008-9-15.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.