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The Determinants of Household's Bank Switching

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  • Marianna Brunetti

    () (Department of Economics and Finance, University of Rome Tor Vergata, Italy)

  • Rocco Ciciretti

    () (Department of Economics and Finance, University of Rome Tor Vergata, Italy; The Rimini Centre for Economic Analysis, Italy)

  • Ljubica Djordjevic

    () (SAFE, Goethe University, Germany)

Abstract

We investigate the determinants of households' bank switching in 2006-2012 period exploiting a unique representative dataset from Bank of Italy Survey on Household Income and Wealth that follows the households and their bank(s) over time. Focusing on the features of the household-bank relationship, we find that exclusivity (using a single bank), intensity (number of services used), and scope (bank services used) of the relationship with the bank play a role in shaping the households' decision to switch. Moreover, we find that this decision is strongly and positively correlated with both taking out and paying off a mortgage. We also find that the risk preferences, mobility and economic condition of the household are not associated with its propensity to switch, whereas education and financial literacy do matter for this decision, albeit with opposite effects. Cooperative and unlisted banks are significantly less likely to be discarded. As expected, competition plays a role increasing switching.

Suggested Citation

  • Marianna Brunetti & Rocco Ciciretti & Ljubica Djordjevic, 2015. "The Determinants of Household's Bank Switching," Working Paper series 15-24, Rimini Centre for Economic Analysis.
  • Handle: RePEc:rim:rimwps:15-24
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    Cited by:

    1. Lydon, Reamonn & McCann, Fergal, 2017. "The income distribution and the Irish mortgage market," Economic Letters 05/EL/17, Central Bank of Ireland.
    2. Carin Cruijsen & Maaike Diepstraten, 2017. "Banking Products: You Can Take Them with You, So Why Don’t You?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 52(1), pages 123-154, October.
    3. D.F. Gerritsen & J.A. Bikker & M. Brandsen, 2017. "Bank switching and deposit rates : Evidence for crisis and non-crisis years," Working Papers 17-08, Utrecht School of Economics.
    4. Marianna Brunetti & Rocco Ciciretti & Ljubica Djordjevic, 2016. "Till Mortgage Do Us Part: Refinancing Costs and Household’s Bank Switching," CEIS Research Paper 364, Tor Vergata University, CEIS, revised 13 Dec 2017.

    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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