How Do Banks Compete? Evidence from Advertising Videos

Xugan Chen, Allen Hu and Song Ma

No 34220, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper studies how banks compete through a novel lens: the content of advertising videos. Using video embeddings, we identify three competitive dimensions: pricing, service quality, and trust-building emotional appeals. We build a framework connecting advertising content to franchise value and monetary policy transmission. Empirical evidence is consistent with model predictions. Banks with high local market shares compete on service and trust while downplaying pricing. New entrants compete primarily on pricing. Banks lacking pricing or service advantages lean on emotional appeals. Non-price advertising strengthens the deposit franchise, enabling banks to maintain wider spreads during monetary tightening and shaping monetary transmission.

JEL-codes: G2 G3 G5 M3 (search for similar items in EconPapers)
Date: 2025-09
Note: CF IO PR
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