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Cross-selling, switching costs and imperfect competition in British banks

Tianshu Zhao, Kent Matthews () and Victor Murinde

Journal of Banking & Finance, 2013, vol. 37, issue 12, 5452-5462

Abstract: This paper attempts to evaluate the competitiveness of British banking in the presence of cross-selling and switching costs during 1993–2008. It presents estimates of a model of banking behaviour that encompasses switching costs as well as cross-selling of loans and off-balance sheet transactions. The evidence from panel estimation of the model indicates that the consumer faced high switching costs in the loan market in the latter part of the sample period, as a result of weaker competitiveness in the loan market. Additionally, the weaker competitiveness in the loan market appears to facilitate the cross-selling behaviour of British banks, which helps explain the rapid growth of non-interest income during the last two decades.

Keywords: Switching costs; Cross-selling; British banks; Competitiveness (search for similar items in EconPapers)
JEL-codes: G21 L13 (search for similar items in EconPapers)
Date: 2013
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Working Paper: Cross-Selling, Switching Costs and Imperfect Competition in British Banks (2011) Downloads
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Handle: RePEc:eee:jbfina:v:37:y:2013:i:12:p:5452-5462