Banking competition and cost stickiness

Eunsuh Lee, Chaehyun Kim and Maria A. Leach-López

Finance Research Letters, 2021, vol. 41, issue C

Abstract: In this paper, we examine how banking competition affects non-financial firms’ cost stickiness. Using the Interstate Banking and Branching Efficiency Act (IBBEA) as an exogenous shock to banking competition, we find that banking competition increases non-financial firms’ cost stickiness. In addition, we find that banking competition increases cost stickiness of non-financial firms by intensifying competitive pressure and improving the availability of credit. Overall, this paper contributes to existing literature by documenting the effect of banking competition on cost behavior and the determinants of cost stickiness.

Keywords: Interstate banking deregulation; Banking competition; Cost stickiness (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:41:y:2021:i:c:s1544612320316731

DOI: 10.1016/j.frl.2020.101859

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