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Switching Costs And The Extent Of Potential Competition In Brazilian Banking

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  • CLAUDIO RIBEIRO DE LUCINDA
  • MARIANA OLIVEIRA E SILV

Abstract

Switching costs are a leading cause of customer lock-in in banking, reducing the extent of competition and increasing market power in this industry. This paper tries to estimate these costs using a methodology that does not require customer microdata. The estimates obtained here-using bank accounting information collected on a quarterly basis from 2009 to 2011-indicate substantial switching costs in the deposit market, and such costs tend to be lower for customers of larger banks. Additionally, there is some evidence that much of a bank's market share is due to its continued relationships with customers over time (a lock-in effect). Thus, the extent of potential competition in Brazilian banking could be severely limited by these costs
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Suggested Citation

  • Claudio Ribeiro De Lucinda & Mariana Oliveira E Silv, 2014. "Switching Costs And The Extent Of Potential Competition In Brazilian Banking," Anais do XLI Encontro Nacional de Economia [Proceedings of the 41st Brazilian Economics Meeting] 139, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
  • Handle: RePEc:anp:en2013:139
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    References listed on IDEAS

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    Cited by:

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    2. Miah, Mohammad Dulal & Kabir, Md. Nurul & Safiullah, Md, 2020. "Switching costs in Islamic banking: The impact on market power and financial stability," Journal of Behavioral and Experimental Finance, Elsevier, vol. 28(C).

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    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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