Demand Estimation and Consumer Welfare in the Banking Industry

By Astrid A. Dick. 2008

201 citations recorded by the source corpus.

This paper estimates a structural demand model for commercial bank deposit services in order to measure the effects on consumers given dramatic changes in bank services throughout US branching deregulation in the 1990s. Following the discrete choice literature, consumer decisions are based on prices and bank characteristics. Consumers are found to respond to deposit rates, and to a lesser extent, to account fees, in choosing a depository institution. Moreover, consumers respond favorably to the branch staffing and geographic density, as well as to the bank's age, size, and geographic diversification. Consumers in most markets experience a slight increase in welfare throughout the period.

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Citations in the corpus

Competition and regulation in the banking sector: A review of the empirical evidence on the sources of bank rents (2007, background): “Dick (2002), for example, estimates a demand model for deposit services following a methodology prevalent in the discrete choice literature.”
Monetary Transmission through Shadow Banks (2018, unknown): “27This set of cost shifters of commercial banks is also used in previous literature such as Dick (2008) and 20 absorb time-invariant bank-specific cost shocks.”
Nationwide branching and its impact on market structure, quality, and bank performance (2003, unknown): “22Using a discrete choice approach, Dick (2002a) estimates a deposit demand function, derived from the consumer’s utility function, which includes some of the quality attributes analyzed in this paper, and finds a consumer welfare increase for the period 1993-1999 in most MSA markets.”
Advertising, Consumer Awareness, and Choice: Evidence from the U.S. Banking Industry (2017, background): “17 For example, Dick (2008) assumes that consumers’ choice sets include all institutions with a physical presence in geographic proximity of the consumer.”
Credit and Banking in a DSGE Model of the Euro Area (2010, unknown): “…the deposit rate and around -3,0 for both loan rates.7 These numbers are pretty much in line with estimates from empirical studies.8 For example, Dick (2002) estimates an interest-rate demand elasticity for deposits at U.S. commercial banks over the period 1993-1999 of between 5.8 and 1.5;…”
Location and competition in retail banking (2011, background): “Dick (2008) estimates that a consumer in the median market experiences a gain in welfare of $8-18 per year from market changes between 1993 and 1999.”