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U.S. Savings Banks' Demutualization and Depositor Welfare

Mattia Girotti () and Richard Meade
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Mattia Girotti: Banque de France

No 2017-08, Working Papers from Auckland University of Technology, Department of Economics

Abstract: Originally, U.S. savings banks were owned by their depositors. In recent decades, many savings banks have "demutualized", by converting from customer to investor ownership. We examine the implications of such events for depositor welfare. We introduce a random coecients logit model of bank account choice and estimate depositors' tastes for bank characteristics (including banks' ownership type). We then measure the effect on depositor welfare of a simulated demutualization of all customer-owned savings banks. We find that depositors' welfare would increase on average. In particular, if demutualize savings banks oered a deposit rate in line with existing demutualized banks, each depositor would gain $1.14 annually, for a total of $22 million for each state and year.

Keywords: Banks; Deposits; Demand Estimation; Customer Ownership; Mutuals (search for similar items in EconPapers)
JEL-codes: D12 G21 L21 P13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban
Date: 2017-08
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