Evidence on the Objectives of Bank Managers

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Evidence on the Objectives of Bank Managers

Author Info

Joseph P. Hughes
Loretta J. Mester

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Loretta J. Mester

Abstract

Analyzing data from the 1989 Survey of Consumer Finances, we find credit card borrowing is inversely correlated with a household’s willingness to comparison shop for loans and deposits. Households with larger balances have higher disutility of search, ceteris paribus. In addition, these households are more likely to be rejected or to be granted a lower-than-desired credit limit when applying for new credit, and so may find it difficult to switch from one card issuer to another. This partly explains the stickiness of card interest rates and why issuers enjoy above-average returns despite the industry’s competitive structure.

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Paper provided by Wharton School Rodney L. White Center for Financial Research in its series Rodney L. White Center for Financial Research Working Papers with number 04-94.

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Handle: RePEc:fth:pennfi:04-94

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Other versions of this item:

Article
- Joseph P. Hughes & Loretta J. Mester, 1994. "Evidence on the objectives of bank managers," Proceedings, Federal Reserve Bank of Chicago, issue May, pages 496-500.
Paper
- Joseph Hughes & Loretta Mester, 1992. "Evidence on the Objectives of Bank Managers," Center for Financial Institutions Working Papers 94-15, Wharton School Center for Financial Institutions, University of Pennsylvania. [Downloadable!]
- Joseph P. Hughes & Loretta J. Mester, . "Evidence on the Objectives of Bank Managers," Rodney L. White Center for Financial Research Working Papers 4-94, Wharton School Rodney L. White Center for Financial Research.

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.:

Mester, Loretta J., 1991. "Agency costs among savings and loans," Journal of Financial Intermediation, Elsevier, vol. 1(3), pages 257-278, June. [Downloadable!] (restricted)
Hunter, William C & Timme, Stephen G & Yang, Won Keun, 1990. "An Examination of Cost Subadditivity and Multiproduct Production in Large U.S. Banks," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 22(4), pages 504-25, November. [Downloadable!] (restricted)
Paul J. Gertler & Donald M. Waldman, 1990. "Quality Adjusted Cost Functions," NBER Working Papers 3567, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Mester, Loretta J., 1992. "Traditional and nontraditional banking: An information-theoretic approach," Journal of Banking & Finance, Elsevier, vol. 16(3), pages 545-566, June. [Downloadable!] (restricted)
Other versions:
- Loretta J. Mester, 1990. "Traditional and nontraditional banking: an information-theoretic approach," Working Papers 90-3, Federal Reserve Bank of Philadelphia.
McAllister, Patrick H. & McManus, Douglas, 1993. "Resolving the scale efficiency puzzle in banking," Journal of Banking & Finance, Elsevier, vol. 17(2-3), pages 389-405, April. [Downloadable!] (restricted)
Joseph P. Hughes & Loretta J. Mester, . "A Quality and Risk-Adjusted Cost Function for Banks: Evidence on the "Too-Big-To-Fail" Doctrine," Rodney L. White Center for Financial Research Working Papers 25-92, Wharton School Rodney L. White Center for Financial Research.
Other versions:
- Joseph P. Hughes & Loretta J. Mester, 1991. "A quality and risk-adjusted cost function for banks: evidence on the " too-big-to-fail" doctrine," Working Papers 91-21, Federal Reserve Bank of Philadelphia.
Hannan, Timothy H & Hanweck, Gerald A, 1988. "Bank Insolvency Risk and the Market for Large Certificates of Deposit," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 20(2), pages 203-11, May. [Downloadable!] (restricted)
Other versions:
- Timothy H. Hannan & Gerald A. Hanweck, 1986. "Bank insolvency risk and the market for large certificates of deposit," Working Papers in Banking, Finance and Microeconomics 86-1, Board of Governors of the Federal Reserve System (U.S.).

Full 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.)

Antonio Lopes & Luca Giordano, 2006. "Risk Preference and Investments Quality as Determinants of Efficiency in the Italian Banking System," Quaderni DSEMS 12-2006, Dipartimento di Scienze Economiche, Matematiche e Statistiche, Universita' di Foggia. [Downloadable!]

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