Random utility models of demand for the U.S. commercial banking industry
In this paper, we specify a Random Utility Model of Demand for Deposits inthe U.S. Banking Industry, assessing its particular characteristics, such as alarge number of participants, a large number of markets and an unbalancedpanel (many banks participate in only one market and no bank participatesin all markets). We modify the standard models to incorporate the fact thatdeposit balances are different among consumers, in a relationship proportionalto their wealth. Using a unique dataset, we estimate the modeland find that characteristics other than the interest rate, such as branchdensity, state presence, etc. add utility to the consumer. The model is alsohelpful in offering a more realistic set of elasticities among the many bankspresent in the sample. It shows how market shares will respond dependingon the market demographics and current choice set (i.e. offerings of otherbanks). Finally, we use the results of the model to analyze changes in welfareduring the 1994-2002 period. By applying a slightly modified versionof Small and Rosen’s equivalent variations, we find that the consolidationprocess of the late 90s was welfare enhancing, particularly for the middleincome consumer.
Volume (Year): 22 (2007)
Issue (Month): 2 (December)
|Contact details of provider:|| Postal: Erasmo Escala 1835, 6500620 Santiago|
Phone: (562) 692-0265
Fax: (562) 692-0303
Web page: http://www.economia.uahurtado.cl/
More information through EDIRC
|Order Information:|| Email: |
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.:
- Wheelock, David C. & Wilson, Paul W., 2004.
"Consolidation in US banking: Which banks engage in mergers?,"
Review of Financial Economics,
Elsevier, vol. 13(1-2), pages 7-39.
- David C. Wheelock & Paul W. Wilson, 2002. "Consolidation in US banking: which banks engage in mergers?," Working Papers 2001-003, Federal Reserve Bank of St. Louis.
- Hannan, Timothy H. & Liang, J. Nellie, 1993.
"Inferring market power from time-series data : The case of the banking firm,"
International Journal of Industrial Organization,
Elsevier, vol. 11(2), pages 205-218, June.
- Timothy H. Hannan & J. Nellie Liang, 1991. "Inferring market power from time-series data: the case of the banking firm," Finance and Economics Discussion Series 147, Board of Governors of the Federal Reserve System (U.S.).
- Amil Petrin, 2002. "Quantifying the Benefits of New Products: The Case of the Minivan," Journal of Political Economy, University of Chicago Press, vol. 110(4), pages 705-729, August.
- Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-90, July.
- Nevo, Aviv, 2001.
"Measuring Market Power in the Ready-to-Eat Cereal Industry,"
Econometric Society, vol. 69(2), pages 307-42, March.
- Aviv Nevo, 2003. "Measuring Market Power in the Ready-to-Eat Cereal Industry," Microeconomics 0303006, EconWPA.
- Aviv Nevo, 1998. "Measuring Market Power in the Ready-to-Eat Cereal Industry," NBER Working Papers 6387, National Bureau of Economic Research, Inc.
- Nevo, Aviv, 1998. "Measuring Market Power in the Ready-To-Eat Cereal Industry," Food Marketing Policy Center Research Reports 037, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
- Nevo, Aviv, 1998. "Measuring Market Power in the Ready-To-Eat Cereal Industry," Research Reports 25164, University of Connecticut, Food Marketing Policy Center.
- Nevo, Aviv, 1999. "Measuring Market Power in the Ready-to-Eat Cereal Industry," Competition Policy Center, Working Paper Series qt7cm5p858, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
- Santomero, Anthony M., 1999. "Bank mergers: What's a policymaker to do?," Journal of Banking & Finance, Elsevier, vol. 23(2-4), pages 637-643, February.
- Steven T. Berry, 1994. "Estimating Discrete-Choice Models of Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 242-262, Summer.
- Mitchell A. Petersen & Raghuram G. Rajan, 2000.
"Does Distance Still Matter? The Information Revolution in Small Business Lending,"
NBER Working Papers
7685, National Bureau of Economic Research, Inc.
- Mitchell A. Petersen & Raghuram G. Rajan, 2002. "Does Distance Still Matter? The Information Revolution in Small Business Lending," Journal of Finance, American Finance Association, vol. 57(6), pages 2533-2570, December.
- DeLong, Gayle L. & Buch, Claudia M., 2001.
"Cross-Border Bank Mergers: What Lures the Rare Animal?,"
Kiel Working Papers
1070, Kiel Institute for the World Economy (IfW).
- Buch, Claudia M. & DeLong, Gayle, 2004. "Cross-border bank mergers: What lures the rare animal?," Journal of Banking & Finance, Elsevier, vol. 28(9), pages 2077-2102, September.
- Claudia M. Buch & Gayle L. DeLong, 2001. "Cross-Border Bank Mergers: What Lures the Rare Animal?," Kiel Working Papers 1070, Kiel Institute for the World Economy.
- Massa, Massimo, 2003. "How do family strategies affect fund performance? When performance-maximization is not the only game in town," Journal of Financial Economics, Elsevier, vol. 67(2), pages 249-304, February.
- Christopher R. Knittel & Victor Stango, 2004.
"Compatibility and Pricing with Indirect Network Effects: Evidence from ATMs,"
NBER Working Papers
10774, National Bureau of Economic Research, Inc.
- Christopher R. Knittel & Victor Stango, 2003. "Compatibility and pricing with indirect network effects: evidence from ATMs," Working Paper Series WP-03-33, Federal Reserve Bank of Chicago.
- Christopher Knittel & Victor Stango, 2005. "Compatibility and Pricing with Indirect Network Effects: Evidence from ATMs," Working Papers 525, University of California, Davis, Department of Economics.
- Douglas D. Evanoff & Evren Ors, 2002. "Local market consolidation and bank productive efficiency," Working Paper Series WP-02-25, Federal Reserve Bank of Chicago.
- Rhoades, Stephen A., 1998. "The efficiency effects of bank mergers: An overview of case studies of nine mergers," Journal of Banking & Finance, Elsevier, vol. 22(3), pages 273-291, March.
- Aviv Nevo, 2000. "A Practitioner's Guide to Estimation of Random-Coefficients Logit Models of Demand," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 9(4), pages 513-548, December.
- Amel, Dean F. & Hannan, Timothy H., 1999. "Establishing banking market definitions through estimation of residual deposit supply equations," Journal of Banking & Finance, Elsevier, vol. 23(11), pages 1667-1690, November.
- Bresnahan, Timothy F., 1989. "Empirical studies of industries with market power," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 17, pages 1011-1057 Elsevier.
- Lawrence J. Radecki, 1998. "The expanding geographic reach of retail banking markets," Economic Policy Review, Federal Reserve Bank of New York, issue Jun, pages 15-34.
- Small, Kenneth A & Rosen, Harvey S, 1981.
"Applied Welfare Economics with Discrete Choice Models,"
Econometric Society, vol. 49(1), pages 105-30, January.
- Harvey S. Rosen & Kenneth A. Small, 1979. "Applied Welfare Economics with Discrete Choice Models," NBER Working Papers 0319, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:ila:anaeco:v:22:y:2007:i:2:p:47-74. 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: (Marcela Perticara)
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.