IDEAS home Printed from https://ideas.repec.org/p/hal/wpaper/hal-01566392.html

Strategic Behavior between a Bank and a Microfinance Institution: The Role of Psychological Distance and Education Level

Author

Listed:
  • François Fall

    (LEREPS - Laboratoire d'Etude et de Recherche sur l'Economie, les Politiques et les Systèmes Sociaux - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - UT2J - Université Toulouse - Jean Jaurès - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - Institut d'Études Politiques [IEP] - Toulouse - ENSFEA - École Nationale Supérieure de Formation de l'Enseignement Agricole de Toulouse-Auzeville)

  • Thanh Tam Nguyen-Huu

    (CREAM - Centre de Recherche en Economie Appliquée à la Mondialisation - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université - IRIHS - Institut de Recherche Interdisciplinaire Homme et Société - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université)

Abstract

In Hotelling's fundamental model (1929), the geographical distance and high transportation costs grant firms present in a market a certain power over local buyers in their neighborhoods. Starting from his model, this study shows that in the competition between a bank and a microfinance institution (MFI), geographical distance and transportation costs alone are no longer sufficient for attributing market power to the firms present. In fact, the introduction of psychological distance and education level in the model alter the Hotelling's results. Psychological proximity (trust) and the educational level of the client play determinant roles in dividing the credit market between a bank and an MFI.

Suggested Citation

  • François Fall & Thanh Tam Nguyen-Huu, 2015. "Strategic Behavior between a Bank and a Microfinance Institution: The Role of Psychological Distance and Education Level," Working Papers hal-01566392, HAL.
    • Handle: RePEc:hal:wpaper:hal-01566392
    Note: View the original document on HAL open archive server: https://univ-tlse2.hal.science/hal-01566392v1
    as

    Download full text from publisher

    File URL: https://univ-tlse2.hal.science/hal-01566392v1/document
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Wong, Kit Pong & Chan, Derek K., 1993. "A simple model of spatial banking competition," Economics Letters, Elsevier, vol. 42(4), pages 391-397.
    2. Matutes, Carmen & Padilla, A. Jorge, 1994. "Shared ATM networks and banking competition," European Economic Review, Elsevier, vol. 38(5), pages 1113-1138, May.
    3. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
    4. d'Aspremont, C & Gabszewicz, Jean Jaskold & Thisse, J-F, 1979. "On Hotelling's "Stability in Competition"," Econometrica, Econometric Society, vol. 47(5), pages 1145-1150, September.
    5. André Grimaud & Jean-Charles Rochet, 1994. "L'apport du modèle de concurrence monopolistique à l'économie bancaire," Revue Économique, Programme National Persée, vol. 45(3), pages 715-726.
    6. Célestin Mayoukou & Pierre-Bruno Ruffini, 1998. "Services bancaires de proximité : les banques locales sont-elles spéciales ?," Revue d'Économie Financière, Programme National Persée, vol. 47(3), pages 165-185.
    7. Michel Dietsch, 1993. "Localisation et concurrence dans la banque," Revue Économique, Programme National Persée, vol. 44(4), pages 779-790.
    8. Chiappori, Pierre-Andre & Perez-Castrillo, David & Verdier, Thierry, 1995. "Spatial competition in the banking system: Localization, cross subsidies and the regulation of deposit rates," European Economic Review, Elsevier, vol. 39(5), pages 889-918, May.
    9. repec:idb:brikps:71758 is not listed on IDEAS
    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. Fall, François & Nguyen-Huu, Thanh Tam, 2015. "Strategic behavior between a bank and a microfinance institution: The role of psychological distance and education level," Economics Discussion Papers 2015-66, Kiel Institute for the World Economy (IfW Kiel).
    2. François Fall & Thanh Tam Nguyen-Huu, 2022. "Strategic Behavior between a Bank and A Microfinance Institution: The Role of Psychological Distance and Education Level," Post-Print hal-04248194, HAL.
    3. Novo-Peteiro, Jos?A., 2009. "Bank mergers in spatially differentiated markets," Journal of Economics and Business, Elsevier, vol. 61(1), pages 90-96.
    4. Kim, Moshe & Vale, Bent, 2001. "Non-price strategic behavior: the case of bank branches," International Journal of Industrial Organization, Elsevier, vol. 19(10), pages 1583-1602, December.
    5. Heidrun C. Hoppe & Ulrich Lehmann-Grube, 2000. "Spatial Competition in Credit Markets," CSEF Working Papers 32, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    6. Matthew Beacham, 2012. "The effect of Stackelberg cost reductions on spatial competition with heterogeneous firms," Discussion Papers 12/14, Department of Economics, University of York.
    7. Hyytinen, Ari, 2003. "Information production and lending market competition," Journal of Economics and Business, Elsevier, vol. 55(3), pages 233-253.
    8. Hyytinen, Ari, 2003. "Loan market equilibrium with difference of opinion and imperfect competition," Economics Letters, Elsevier, vol. 78(1), pages 125-129, January.
    9. Guo, Wen-Chung & Tseng, Ping-Lun, 2023. "COVID-19, bank risk, and capital regulation: The aggregate shock and social distancing," The Quarterly Review of Economics and Finance, Elsevier, vol. 92(C), pages 155-173.
    10. Ralph Braid, 2014. "The socially optimal and equilibrium locations of two stores or libraries with consumer search," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(1), pages 123-136, August.
    11. Bouckaert, Jan & Degryse, Hans, 1995. "Phonebanking," European Economic Review, Elsevier, vol. 39(2), pages 229-244, February.
    12. THARAKAN, Joe & THISSE, Jacques-François, 2000. "The importance of being small : size effects in international trade," LIDAM Discussion Papers CORE 2000001, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    13. Gu Yiquan & Wenzel Tobias, 2012. "Price-Dependent Demand in Spatial Models," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-26, March.
    14. Kuangnen Cheng & Hui-Ping Chen & Jason Lee, 2015. "Competition behavior in service frequency for U.S. airlines," Service Business, Springer;Pan-Pacific Business Association, vol. 9(1), pages 1-16, March.
    15. Paul B. Ellickson, 2013. "Supermarkets As A Natural Oligopoly," Economic Inquiry, Western Economic Association International, vol. 51(2), pages 1142-1154, April.
    16. Gaëtan Fournier & Marco Scarsini, 2014. "Hotelling Games on Networks: Efficiency of Equilibria," Documents de travail du Centre d'Economie de la Sorbonne 14033, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    17. Fraser Summerfield, 2016. "Matching Skill and Tasks: Cyclical Fluctuations in the Overqualification of New Hires," Working Paper series 16-08, Rimini Centre for Economic Analysis.
    18. Dell'Ariccia, Giovanni, 2001. "Asymmetric information and the structure of the banking industry," European Economic Review, Elsevier, vol. 45(10), pages 1957-1980, December.
    19. Ding, Rong & Ko, Chiu Yu & Shen, Bo, 2022. "Partial compatibility in two-sided markets: Equilibrium and welfare analysis," Economic Modelling, Elsevier, vol. 116(C).
    20. Chu, Kam Hon, 2010. "Bank mergers, branch networks and economic growth: Theory and evidence from Canada, 1889-1926," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 265-283, March.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    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:hal:wpaper:hal-01566392. 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: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    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.