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U.S. Savings Banks' Demutualization and Depositor Welfare

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  • M. Girotti
  • R. Meade

Abstract

Originally, U.S. savings banks were owned by their depositors. In recent decades, many savings banks have “demutualized”, by converting from customer to investor ownership. We examine the implications of such events for depositor welfare. We introduce a random coefficients logit model of bank account choice and estimate depositors' tastes for bank characteristics (including banks'ownership type). We then measure the effect on depositor welfare of a simulated demutualization of all customer-owned savings banks. We find that depositors' welfare would increase on average.In particular, if demutualized savings banks offered a deposit rate in line with existing demutualized banks, each depositor would gain $1.14 annually, for a total of $22 million for each state and year.

Suggested Citation

  • M. Girotti & R. Meade, 2017. "U.S. Savings Banks' Demutualization and Depositor Welfare," Working papers 639, Banque de France.
  • Handle: RePEc:bfr:banfra:639
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    Cited by:

    1. Mattia Girotti & Federica Salvadè, 2022. "Competition and Agency Problems Within Banks: Evidence from Insider Lending," Management Science, INFORMS, vol. 68(5), pages 3791-3812, May.

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    More about this item

    Keywords

    Banks; Deposits; Demand Estimation; Customer Ownership; Mutuals.;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • P13 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Cooperative Enterprises

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