Dynamic branching and interest rate competition of commercial banks: : Evidence from Hungary

• Autores: Judit Temesvary
• Localización: International journal of industrial organization, ISSN 0167-7187, Vol. 43, Nº. 0, 2015, págs. 98-110
• Idioma: inglés
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• Resumen

  • I supplement previous models of bank competition by incorporating the endogenous branching choices of commercial banks. I apply a dynamic structural model of banks' branching and interest rate choices to a unique bank-level dataset on Hungarian commercial banks during 2004–2007. I find that banks charge a premium in interest rates for relative branch network dominance, and banks with relatively smaller networks are less likely to close branches. I present significant and robust estimates of branch setup costs and scrap values, and discuss the potential use of branching restrictions as regulatory tools to alter lending rates and consumer surplus