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The Determinants of Household's Bank Switching

Listed author(s):
  • 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)

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.

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File URL: http://www.rcfea.org/RePEc/pdf/wp15-24.pdf
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Paper provided by The Rimini Centre for Economic Analysis in its series Working Paper Series with number 15-24.

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Date of creation: Jul 2015
Handle: RePEc:rim:rimwps:15-24
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