Evidence on the Objectives of Bank Managers
AbstractAnalyzing 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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Bibliographic InfoPaper 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 4-94.
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Other versions of this item:
- Joseph P. Hughes & Loretta J. Mester, 1994. "Evidence on the objectives of bank managers," Proceedings 46, Federal Reserve Bank of Chicago.
- 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.
- Joseph P. Hughes & Loretta J. Mester, . "Evidence on the Objectives of Bank Managers," Rodney L. White Center for Financial Research Working Papers 04-94, Wharton School Rodney L. White Center for Financial Research.
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