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Foreign fees and customers'cash withdrawals

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  • Magnac, Thierry

Abstract

In this paper, we evaluate the impact of foreign fees, paid by consumers when they withdraw cash at banks that are not their own, on their withdrawals. We take advantage of a natural experiment whereby (non linear) payment fees for withdrawing cash at foreign ATMs were introduced at one point in time. We also use this experiment to evaluate the substitutions between foreign withdrawals and various other means of payment such as own bank or desk withdrawals, payments by card or cheque. Using panel data on accounts at one specific bank, we first estimate reduced form treatment effect models before carrying on with the estimation of a structural model. The latter allows us to compute the counterfactual impacts of changing the non linear schedule of foreign fees. Impacts are sizeable and in particular on bank profits.

Suggested Citation

  • Magnac, Thierry, 2015. "Foreign fees and customers'cash withdrawals," TSE Working Papers 15-560, Toulouse School of Economics (TSE).
    • Handle: RePEc:tse:wpaper:29122
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    References listed on IDEAS

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    More about this item

    Keywords

    Cash holding; policy evaluation; costs of means of payment; treatment effects;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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