Switching costs in the Finnish retail deposit market

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Title: Switching costs in the Finnish retail deposit market
ISBN: 978-952-323-289-1
Author: Takalo, Tuomas
Organization: Bank of Finland
Series: Bank of Finland Research Discussion Papers
ISSN: 1456-6184
Series year: 2019
Series number: 15/2019
Year of publication: 2019
Publication date: 5.9.2019
Pages: 21
Subject (yso): pankit; kilpailu (toiminta); talletukset
Keywords: pankkikilpailu; Suomi; vähittäispankkitoiminta; kanta-asiakasohjelmat
JEL: G21; L13; L49
Other keywords: swithcing costs; bank competition; customer loyalty programs
Abstract: 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 banks are high, ranging from 200 euros to nearly 1,400 euros. Over the past 20 years, switching costs have increased by roughly 50% in real terms, but in relation to average account balance, switching costs have not essentially changed. I conjecture that differences in the switching costs among the Finnish banks might be explained by differences in their loyalty programs.
Rights: https://helda.helsinki.fi/bof/copyright

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