Cross-selling,switching costs and imperfect competition in British banks |
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Authors: | Tianshu Zhao Kent Matthews Victor Murinde |
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Institution: | 1. Stirling Management School, University of Stirling, United Kingdom;2. Cardiff Business School, Cardiff University, United Kingdom;3. Birmingham Business School, University of Birmingham, United Kingdom |
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Abstract: | This paper attempts to evaluate the competitiveness of British banking in the presence of cross-selling and switching costs during 1993–2008. It presents estimates of a model of banking behaviour that encompasses switching costs as well as cross-selling of loans and off-balance sheet transactions. The evidence from panel estimation of the model indicates that the consumer faced high switching costs in the loan market in the latter part of the sample period, as a result of weaker competitiveness in the loan market. Additionally, the weaker competitiveness in the loan market appears to facilitate the cross-selling behaviour of British banks, which helps explain the rapid growth of non-interest income during the last two decades. |
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Keywords: | G21 L13 |
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