Switching costs in the Finnish retail deposit market

Tuomas Takalo

No 15/2019, Bank of Finland Research Discussion Papers from Bank of Finland

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.

JEL-codes: G21 L13 L49 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofrdp:rdp2019_015

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