Switching costs in the Finnish retail deposit market
Takalo, Tuomas (08.10.2020)
JulkaisusarjaJournal of the Finnish Economic Association
Julkaisun pysyvä osoite onhttps://urn.fi/URN:NBN:fi:bof-202002181133
I calibrate switching cost for the Finnish retail deposit market by using the approach developed by Oz Shy (2002). It turns out that switching costs faced by deposit customers of the main Finnish banks manifest large variation and are high, ranging from 200 euros to nearly 1,400 euros. Over a 20-year period, switching costs have increased by roughly 50% in real terms, but in relation to average account balance, switching costs have not essentially changed. Changes and differences in the banks’ competitive strategies might explain the variation in switching costs across time and banks.
Published in BoF DP 15/2019 http://urn.fi/URN:NBN:fi:bof-201909061438