The influence of product age on pricing decisions: An examination of bank deposit interest rate setting

Anderson, Robert D.J.; Ashton, John K.; Hudson, Robert S.

Abstract

Do banks extract rent from depositors who hold older deposit accounts? This study addresses this question using product level data from the UK instant access (branch based) deposit market. In this context, two research questions related to the conditions necessary for differential pricing for existing and new customers are assessed. Specifically whether more mature deposit accounts have lower interest rates and does the newest deposit account in a firm portfolio pay an interest rate premium? Empirical support is provided for both questions, with interest rate setting for new and existing deposit accounts also found to be influenced by firm type.

Citation

Anderson, R. D., Ashton, J. K., & Hudson, R. S. (2014). The influence of product age on pricing decisions: An examination of bank deposit interest rate setting. Journal of International Financial Markets, Institutions and Money, 31, 216-230. https://doi.org/10.1016/j.intfin.2014.03.010

• Journal Article Type: Article
• Acceptance Date: Mar 26, 2014
• Online Publication Date: Apr 3, 2014
• Publication Date: 2014-07
• Deposit Date: Jun 8, 2022
• Journal: Journal of International Financial Markets, Institutions and Money
• Print ISSN: 1042-4431
• Publisher: Elsevier
• Volume: 31
• Pages: 216-230
• DOI: https://doi.org/10.1016/j.intfin.2014.03.010
• Public URL: https://hull-repository.worktribe.com/output/524131