A Multiprocess Mixture Model to Estimate Space-Time Dimensions of Weekly Pricing of Certificates of Deposit

James LeSage

Chapter 15 in New Directions in Spatial Econometrics, 1995, pp 359-397 from Springer

Abstract: Abstract The spatial dimension of banking markets is often discussed in the banking and finance literature, but neglected in empirical studies of behavior by depository institutions. As Anselin and Griffith (1988) point out, neglect of spatial aspects of economic behavior is not unusual, even by those working in regional science. Traditional depository institution regulatory policy, based on a structural analysis of local markets, generally operates under the assumption of the U.S. banking system as a collection of segmented markets versus an integrated national banking system. From this perspective, banks and thrifts in local regions have little or no effect on the pricing decisions of firms operating in other localities. In the deregulated banking environment of the 1980s, some bank retail deposit markets may be better characterized as operating in such a way as to generate spatial effects. As of October 1983, all depository institutions were permitted to offer competitive market rates on interest-sensitive deposits, including retail certificates of deposit (CDs). In turn, many institutions, particularly large banks, have used national advertising and brokers to attract large retail (insured) deposits from other regions. With greater deregulation and competition for deposit funds and increased reliance of banks on interest-sensitive deposits, significant spatial effects in the deposit-rate setting decisions of banks across regions might be expected. The presence or lack of spatial effects in regional bank markets is important to bank managers, analysts, and regulators in terms of defining relevant markets and measuring the competitive effects of greater deregulation.

Keywords: Adjustment Cost; Spatial Weighting Matrix; Rate Offer; Crisis Event; Deposit Level (search for similar items in EconPapers)
Date: 1995
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:adspcp:978-3-642-79877-1_15

Ordering information: This item can be ordered from
http://www.springer.com/9783642798771

DOI: 10.1007/978-3-642-79877-1_15

Access Statistics for this chapter

More chapters in Advances in Spatial Science from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().