Switching costs and market power in the banking industry: The case of cooperative banks

Damien Egarius and Laurent Weill

Journal of International Financial Markets, Institutions and Money, 2016, vol. 42, issue C, 155-165

Abstract: We investigate the influence of switching costs in banking for the three largest Eurozone countries (France, Germany, and Italy). We use Shy (2002) approach to measure switching costs on bank-level data from 2006 to 2012. We examine whether cooperative banks have different switching costs than commercial banks. We find lower switching costs for cooperative banks, suggesting that their client-based ownership contributes to reduce incentives to bank managers to lock in customers. We analyse whether the level of switching costs influences the market power of banks, and conclude to a positive relation between switching costs and market power.

Keywords: Switching costs; Market power; Cooperative banks (search for similar items in EconPapers)
JEL-codes: G21 L11 P13 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (18)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:42:y:2016:i:c:p:155-165

DOI: 10.1016/j.intfin.2016.03.007

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