Till mortgage do us part: Mortgage switching costs and household's bank switching
Marianna Brunetti (),
R. Ciciretti and
Journal of Banking & Finance, 2020, vol. 119, issue C
We investigate the role of mortgage switching costs in shaping the households’ decision to change their main bank. To this end, we use a unique panel dataset that enables us to infer household's bank switching, in conjunction with a legal reform that exogenously slashed down the mortgage switching costs. The empirical evidence, which survives to a variety of robustness checks, supports the hypothesis that the explicit switching costs in the retail banking market are a weighty factor in shaping households’ bank switching, despite any potential “informational lock-in”. Dissecting the results, we show that the effects of the reform were not uniform across households. The more educated households, those with a longer or broader relationship with their previous bank and those residing in ex-ante less competitive banking markets were at the forefront of the wave of bank switching.
Keywords: Bank switching; Mortgage switching costs; Household finance (search for similar items in EconPapers)
JEL-codes: G21 D14 (search for similar items in EconPapers)
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Working Paper: Till Mortgage Do Us Part: Mortgage Switching Costs and Household’s Bank Switching (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:119:y:2020:i:c:s0378426620301709
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