标题：Switching Cost and the Deposit Demand in China

汇报人：何振宇（上海交通大学）

功夫：2:00-3:30pm, November 8

地址：拉斯维加斯9888新楼217教室

Abstract:

This paper develops and estimates a dynamic model of consumer demand for deposits, in which banks provide differentiated products, and product characteristics evolve over time. Existing consumers are forward looking and incur a fixed cost for switching banks, whereas incoming consumers do not incur any cost for joining banks. The main finding is that consumers prefer banks with more employees and branches. The switching cost is about 0.8% of deposit value, which leads the static model biases the demand estimates. The dynamic model shows that the price elasticity over a long time horizon is substantially larger than those over a short time horizon. Counterfactual experiments with a dynamic monopoly show that the switching cost partially explains the bank pricing on service fees.