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Product differentiation and consumption efficiency in mortgage markets

  • Ward, Damian Robert
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    This study evaluates the outcome of non-price competition in the UK mortgage market. Developing a novel application of data envelopment analysis, DEA, within the banking literature, this study finds evidence of high consumption efficiency. Employing cluster analysis, the study provides additional evidence that efficient mortgages are available for borrowers across a broad range of market segments. The study also shows that these beneficial aspects of non-price competition are only available to borrowers who select mortgages based on rational measures of price. The discussion closes with guidance for policymakers.

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    File URL: http://www.sciencedirect.com/science/article/B6V7S-4SC5PNJ-1/2/423ca5a6b008b3c21c62af016e3e1787
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    Article provided by Elsevier in its journal Journal of Business Research.

    Volume (Year): 62 (2009)
    Issue (Month): 8 (August)
    Pages: 805-809

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    Handle: RePEc:eee:jbrese:v:62:y:2009:i:8:p:805-809
    Contact details of provider: Web page: http://www.elsevier.com/locate/jbusres

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    1. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-91, March.
    2. Campbell, John & Cocco, Joao, 2003. "Household Risk Management and Optimal Mortgage Choice," Scholarly Articles 3157876, Harvard University Department of Economics.
    3. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    4. David Miles, 2005. "Incentives Information and Efficiency in the UK Mortgage Market," Economic Journal, Royal Economic Society, vol. 115(502), pages C82-C98, 03.
    5. Lee, Jeongdong & Repkine, Alexandre & Hwang, Seogwon & Kim, Taiyoo, 2004. "Estimating Consumers’ Willingness to Pay for the Individual Quality Attributes with DEA," MPRA Paper 7848, University Library of Munich, Germany.
    6. Patrick L. Brockett & William W. Cooper & Linda L. Golden & John J. Rousseau & Yuying Wang, 2005. "Financial Intermediary Versus Production Approach to Efficiency of Marketing Distribution Systems and Organizational Structure of Insurance Companies," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 72(3), pages 393-412.
    7. Corvoisier, Sandrine & Gropp, Reint, 2002. "Bank concentration and retail interest rates," Journal of Banking & Finance, Elsevier, vol. 26(11), pages 2155-2189, November.
    8. Juan Fernández de Guevara & Joaquín Maudos & Francisco Pérez, 2005. "Market Power in European Banking Sectors," Journal of Financial Services Research, Springer, vol. 27(2), pages 109-137, April.
    9. Maudos, Joaquin & Fernandez de Guevara, Juan, 2003. "Factors Explaining the Interest Margin in the Banking Sectors of the European Union," MPRA Paper 15252, University Library of Munich, Germany.
    10. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132.
    11. Maria Silva Portela & Pedro Borges & Emmanuel Thanassoulis, 2003. "Finding Closest Targets in Non-Oriented DEA Models: The Case of Convex and Non-Convex Technologies," Journal of Productivity Analysis, Springer, vol. 19(2), pages 251-269, April.
    12. Angel S. Fernandez-Castro & Peter C. Smith, 2002. "Lancaster's characteristics approach revisited: product selection using non-parametric methods," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 23(2), pages 83-91.
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