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Strategic Incompatibility in ATM Markets

  • Christopher R. Knittel
  • Victor Stango

We test whether firms use incompatibility strategically, using data from ATM markets. High ATM fees degrade the value of competitors' deposit accounts, and can in principle serve as a mechanism for siphoning depositors away from competitors or for creating deposit account differentiation. Our empirical framework can empirically distinguish surcharging motivated by this strategic concern from surcharging that simply maximizes ATM profit considered as a stand-alone operation. The results are consistent with such behavior by large banks, but not by small banks. For large banks, the effect of incompatibility seems to operate through higher deposit account fees rather than increased deposit account base.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12604.

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Date of creation: Oct 2006
Date of revision:
Publication status: published as Knittel, Christopher and Victor Stango. "Strategic Incompatibility in ATM Markets." Journal of Banking and Finance. Volume 35, Issue 10, October 2011, Pages 2627-2636.
Handle: RePEc:nbr:nberwo:12604
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