IDEAS home Printed from https://ideas.repec.org/a/nwe/eajour/y2020i2p311-327.html

Behavioural Economic Tools as a Way to Increase Customers’ Response in the Banking Sector

Author

Listed:
  • Yanko Yankov

    (University of World and National Economy, Sofia, Bulgaria)

Abstract

The proper functioning of the banking sector is of great importance to the national and world economy. Ever since the crisis of 2008 banks have experienced a decrease in revenue for various reasons. This decline is worrying and while external factors cannot be altered by financial institutions, their effect can be reduced with the formulation and application of a focused marketing strategy. The purpose of this article is to determine whether implementation of behavioural finance can attract customers and improve sales in a sector with seemingly decreasing potential and growing competition. The research topic is the change in customer behaviour as a result of implementing behavioural techniques (nudges). The object of analysis is a leading bank in Bulgaria and its interaction with the customers. There are three main tasks in this article: – to show how the economic crisis as an external factor has contributed to changes in regulation and consolidation on the Bulgarian banking market; – to conduct a literature overview of some of the behavioural economics aspects, which can be incorporated in banking practices; – to present the results of a Bulgarian bank, which manages to improve the outcome of its campaigns and to apply the idea behind the customer decisionmaking matrix in its marketing mix by employing the tools defined in the literature overview. There is an abundance of theoretical research on behavioural economics, far less evidence from empirical studies in various sectors and none from the banking sector. The aim of this article is to shed some light on the topic. The major assumption held in this study is that the use of behavioural finance tools in banks’ marketing policies can increase customer response rate and help increase sales.

Suggested Citation

  • Yanko Yankov, 2020. "Behavioural Economic Tools as a Way to Increase Customers’ Response in the Banking Sector," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 2, pages 311-327, June.
    • Handle: RePEc:nwe:eajour:y:2020:i:2:p:311-327
    as

    Download full text from publisher

    File URL: https://www.unwe.bg/doi/eajournal/2020.2/EA.2020.2.08.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Romer, Christina D., 1992. "What Ended the Great Depression?," The Journal of Economic History, Cambridge University Press, vol. 52(4), pages 757-784, December.
    2. Ion Lapteacru, 2018. "Convergence of bank competition in Central and Eastern European countries: do foreign and domestic banks go hand in hand?," Post-Print hal-03711698, HAL.
    3. Moid U. Ahmad & Hetti Arachchige Gamini Premaratne, 2018. "Effect of Low and Negative Interest Rates: Evidence from Indian and Sri Lankan Economies," Business Perspectives and Research, , vol. 6(2), pages 90-99, July.
    4. Ion Lapteacru, 2018. "Convergence of bank competition in Central and Eastern European countries: do foreign and domestic banks go hand in hand?," Post-Communist Economies, Taylor & Francis Journals, vol. 30(5), pages 588-616, September.
    5. Andrew Leigh, 2015. "How behavioural economics does and can shape public policy," The Economic and Labour Relations Review, , vol. 26(2), pages 339-346, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Maria Karadima & Helen Louri, 2020. "Bank competition and credit risk in the Euro area, 2005-2017: Is there evidence of convergence?," LEQS – LSE 'Europe in Question' Discussion Paper Series 155, European Institute, LSE.
    2. Coccorese, Paolo & Girardone, Claudia & Shaffer, Sherrill, 2021. "What affects bank market power in the euro area? A country-level structural model approach," Journal of International Money and Finance, Elsevier, vol. 117(C).
    3. Maria Karadima & Helen Louri, 2020. "Bank Competition and Credit Risk in Euro Area Banking: Fragmentation and Convergence Dynamics," JRFM, MDPI, vol. 13(3), pages 1-28, March.
    4. Aiginger, Karl, 2010. "The Great Recession vs. the Great Depression: Stylized facts on siblings that were given different foster parents," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 4, pages 1-41.
    5. Calomiris, Charles W. & Mason, Joseph R. & Wheelock, David C., 2011. "Did Doubling Reserve Requirements Cause the Recession of 1937-1938? A Microeconomic Approach," Working Papers 11-03, University of Pennsylvania, Wharton School, Weiss Center.
    6. Bordo, Michael D & Choudhri, Ehsan U & Schwartz, Anna J, 1995. "Could Stable Money Have Averted the Great Contraction?," Economic Inquiry, Western Economic Association International, vol. 33(3), pages 484-505, July.
    7. Ben S. Bernanke & Vincent R. Reinhart & Brian P. Sack, 2004. "Monetary Policy Alternatives at the Zero Bound: An Empirical Assessment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 35(2), pages 1-100.
    8. Paolera, Gerardo Della & Taylor, Alan M., 1999. "Economic Recovery from the Argentine Great Depression: Institutions, Expectations, and the Change of Macroeconomic Regime," The Journal of Economic History, Cambridge University Press, vol. 59(3), pages 567-599, September.
    9. Edwards, Sebastian, 2020. "Change of monetary regime, contracts, and prices: Lessons from the great depression, 1932–1935," Journal of International Money and Finance, Elsevier, vol. 108(C).
    10. Matthieu Charpe & Peter Flaschel & Florian Hartmann & Roberto Veneziani, 2012. "Towards Keynesian DSGD (isequilibrium) Modelling: Real-Financial Market Interactions with Heterogeneous Expectations Dynamics," IMK Working Paper 93-2012, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    11. Christina D. Romer, 2014. "It Takes a Regime Shift: Recent Developments in Japanese Monetary Policy through the Lens of the Great Depression," NBER Macroeconomics Annual, University of Chicago Press, vol. 28(1), pages 383-400.
    12. Margaret M. Jacobson & Eric M. Leeper & Bruce Preston, 2019. "Recovery of 1933," NBER Working Papers 25629, National Bureau of Economic Research, Inc.
    13. Joshua K. Hausman & Johannes F. Wieland, 2015. "Overcoming the Lost Decades? Abenomics after Three Years," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 46(2 (Fall)), pages 385-431.
    14. Alan J. Auerbach & Maurice Obstfeld, 2003. "The case for open-market purchases in a liquidity trap," Proceedings, Federal Reserve Bank of San Francisco, issue mar.
    15. Bordo, Michael D. & Haubrich, Joseph G., 2010. "Credit crises, money and contractions: An historical view," Journal of Monetary Economics, Elsevier, vol. 57(1), pages 1-18, January.
    16. Ben S. Bernanke & Vincent R. Reinhart, 2004. "Conducting Monetary Policy at Very Low Short-Term Interest Rates," American Economic Review, American Economic Association, vol. 94(2), pages 85-90, May.
    17. Miguel Almunia & Agustín Bénétrix & Barry Eichengreen & Kevin H. O’Rourke & Gisela Rua, 2010. "From Great Depression to Great Credit Crisis: similarities, differences and lessons [Germany: Guns, butter, and economic miracles]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 25(62), pages 219-265.
    18. Michael D. Bordo, 2014. "The Federal Reserve's Role: Actions Before, During, and After the 2008 Panic the Historical Context of the Great Contraction," Book Chapters, in: Martin Neil Baily & John B. Taylor (ed.), Across the Great Divide: New Perspectives on the Financial Crisis, chapter 6, Hoover Institution, Stanford University.
    19. Kotaro Ishi & Mr. Kenji Fujita & Mr. Mark R. Stone, 2011. "Should Unconventional Balance Sheet Policies Be Added to the Central Bank toolkit? a Review of the Experience so Far," IMF Working Papers 2011/145, International Monetary Fund.
    20. Peter F. Basile & John Landon-Lane & Hugh Rockoff, 2010. "Money and Interest Rates in the United States during the Great Depression," NBER Working Papers 16204, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nwe:eajour:y:2020:i:2:p:311-327. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Vanya Lazarova (email available below). General contact details of provider: https://edirc.repec.org/data/unweebg.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.