Service provision and loans : Price and risk implications
Deregulation of the banking system has increased competition and prompted wide changes in the activities of banks. As revenue from intermediation activities of banks has decreased, banks have broadened the range of products they offer to their clients, which generate revenue other than interest margin. This paper offers a complementary explanation of the link between intermediation activities and service provision. We show that banks may be willing to decrease their lending rate, using loans as loss leader, and take on higher credit risk, in order to capture clients to whom they can sell services.
Volume (Year): 118 (2008)
Issue (Month): 3 ()
|Contact details of provider:|| Web page: http://www.cairn.info/revue-d-economie-politique.htm|
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.:
- Tarkka, Juha, 1995. "Approaches to deposit pricing : a study in the determination of deposit interest and bank service charges," Scientific Monographs, Bank of Finland, number 1995_002, September.
- Jean-Charles Rochet, 1992. "Concurrence imparfaite et stratégie bancaire," Revue Économique, Programme National Persée, vol. 43(2), pages 261-276.
- Chiappori, P.A. & Perez-Castrillo, D. & Verdier, T., 1992.
"Spatial Competition in the Banking System: Localization, Cross Subsidies and the Regulation of Deposit Rates,"
DELTA Working Papers
92-15, DELTA (Ecole normale supérieure).
- Chiappori, Pierre-Andre & Perez-Castrillo, David & Verdier, Thierry, 1995. "Spatial competition in the banking system: Localization, cross subsidies and the regulation of deposit rates," European Economic Review, Elsevier, vol. 39(5), pages 889-918, May.
- Paul Klemperer, 1995. "Competition when Consumers have Switching Costs: An Overview with Applications to Industrial Organization, Macroeconomics, and International Trade," Review of Economic Studies, Oxford University Press, vol. 62(4), pages 515-539.
- Schmidt, Reinhard H. & Hackethal, Andreas & Tyrell, Marcel, 1999. "Disintermediation and the Role of Banks in Europe: An International Comparison," Journal of Financial Intermediation, Elsevier, vol. 8(1-2), pages 36-67, January.
- Luc Jacolin & Olivier Paquier & Antoine Mérieux & Christophe Marchand, 1995. "La tarification des crédits," Revue d'Économie Financière, Programme National Persée, vol. 35(4), pages 119-140.
- Stiroh, Kevin J, 2004.
"Diversification in Banking: Is Noninterest Income the Answer?,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 36(5), pages 853-82, October.
- Kevin J. Stiroh, 2002. "Diversification in banking: is noninterest income the answer?," Staff Reports 154, Federal Reserve Bank of New York.
- DeYoung, Robert & Roland, Karin P., 2001. "Product Mix and Earnings Volatility at Commercial Banks: Evidence from a Degree of Total Leverage Model," Journal of Financial Intermediation, Elsevier, vol. 10(1), pages 54-84, January.
- Kim, Moshe & Kliger, Doron & Vale, Bent, 2003. "Estimating switching costs: the case of banking," Journal of Financial Intermediation, Elsevier, vol. 12(1), pages 25-56, January.
- Stephen Rhoades, 2000. "Retail Commercial Banking: An Update on a Period of Extraordinary Change," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 16(4), pages 357-366, June.
- Mireille Jaeger, 2000. "Vente à perte dans le secteur bancaire et avantage concurrentiel des banques mutuelles et coopératives," Revue d'Économie Financière, Programme National Persée, vol. 56(1), pages 195-216.
- Steven Drucker & Manju Puri, 2004. "Tying knots: lending to win equity underwriting business," Proceedings 944, Federal Reserve Bank of Chicago.
- André Grimaud & Jean-Charles Rochet, 1994. "L'apport du modèle de concurrence monopolistique à l'économie bancaire," Revue Économique, Programme National Persée, vol. 45(3), pages 715-726.
- Adar, Zvi & Agmon, Tamir & Orgler, Yair E, 1975. "Output Mix and Jointness in Production in the Banking Firm," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 7(2), pages 235-43, May.
- Xavier Freixas & Jean-Charles Rochet, 1997. "Microeconomics of Banking," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061937, March.
- Laetitia Lepetit & Emmanuelle Nys & Philippe Rous & Amine Tarazi, 2008.
"Bank income structure and risk: An empirical analysis of European banks,"
- Lepetit, Laetitia & Nys, Emmanuelle & Rous, Philippe & Tarazi, Amine, 2008. "Bank income structure and risk: An empirical analysis of European banks," Journal of Banking & Finance, Elsevier, vol. 32(8), pages 1452-1467, August.
- Laetitia Lepetit & Emmanuelle Nys & Philippe Rous & Amine Tarazi, 2008. "Bank income structure and risk: An empirical analysis of European banks," Post-Print hal-00844820, HAL.
- Melnik, Arie & Plaut, Steven, 1986. " Loan Commitment Contracts, Terms of Lending, and Credit Allocation," Journal of Finance, American Finance Association, vol. 41(2), pages 425-435, June.
- Didier Négiar & Dominique Carrel Billiard & Antoine Mérieux & Christophe Marchand, 1995. "Tarification des services bancaires : où se situe la France ?," Revue d'Économie Financière, Programme National Persée, vol. 35(4), pages 45-60.
- Barro, Robert J & Santomero, Anthony J, 1972. "Household Money Holdings and The Demand Deposit Rate," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 4(2), pages 397-413, May.
- Stango, Victor, 2002. "Pricing with Consumer Switching Costs: Evidence from the Credit Card Market," Journal of Industrial Economics, Wiley Blackwell, vol. 50(4), pages 475-492, December.
- Alex Cukierman, 1978. "The Horizontal Integration of the Banking Firm, Credit Rationing and Monetary Policy," Review of Economic Studies, Oxford University Press, vol. 45(1), pages 165-178.
When requesting a correction, please mention this item's handle: RePEc:cai:repdal:redp_183_0411. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jean-Baptiste de Vathaire)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.