The determinants and profitability of switching costs in Chinese banking

Wei Yin and Kent Matthews

Applied Economics, 2016, vol. 48, issue 43, 4156-4166

Abstract: This article models the determinants of bank switching costs in China in terms of bank characteristics and non-bank variables. It also determines the contribution of switching costs to banks’ profits. Using a sample of 151 banks over the period 2003–2013 it reports a positive relationship between bank profitability and switching costs. The main result is that bank size measured by total assets has a complex relationship with switching costs. Competition between small banks creates the incentive for lock-in and increased switching costs whereas very large banks are less exercised by lock-in and switching costs.

Date: 2016
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Working Paper: The determinants and profitability of switching costs in Chinese banking (2014)
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DOI: 10.1080/00036846.2016.1153790

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