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

Judit Temesvary

International Journal of Industrial Organization, 2015, vol. 43, issue C, 98-110

Abstract: 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.

Keywords: Dynamic analysis; Endogenous branching; Spatial competition; Interest rate choices; Structural estimation (search for similar items in EconPapers)
JEL-codes: C3 G2 L1 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:43:y:2015:i:c:p:98-110

DOI: 10.1016/j.ijindorg.2015.09.003

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