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Modeling the whole firm: the effect of multiple inputs and financial intermediation on bank deposit rates Author info | Abstract | Publisher info | Download info | Related research | Statistics Elizabeth K. Kiser
Empirical studies of price competition typically analyze the direct effects of market structure, cost, and local demand on prices; this approach has been applied widely to studies of bank deposit rates. However, the theory of the banking firm suggests that substitutability between sources of deposits and conditions in the bank loan market should also affect the pricing of retail deposits. This paper develops a theoretical model to incorporate these effects, and tests the predictions empirically using institution-level deposit rate data from Bank Rate Monitor. The results suggest that the cost of large-scale deposits affects how banks price retail deposits, and that conditions in lending markets feed back into retail deposit rates.
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Paper provided by Board of Governors of the Federal Reserve System (U.S.) in its series Finance and Economics Discussion Series with number
2004-07.
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Date of creation: 2004Date of revision:
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Keywords: Bank deposits Bank loans Other versions of this item:
This paper has been announced in the following NEP Reports :
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references Cited by : (explanations , 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.)
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Kwangwoo Park & George G. Pennachi, 2004.
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Timothy H. Hannan & Robin A. Prager, 2004.
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2004-38, Board of Governors of the Federal Reserve System (U.S.).
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