Financial intermediation and bank spreads are important elements in the analysis of business cycle transmission and monetary policy. We present a simple framework that introduces lending relationships, a relevant feature of financial intermediation that has been so far neglected in the monetary...

We explore Lithuanian credit register data and two bank closures to provide a novel estimate of firms' bank-switching costs and a novel identification of the hold-up problem. We show that when a distressed bank's closure forced firms to switch, these firms started borrowing at lower interest...

Using administrative data on deposits and loans of every Norwegian with every Norwegian bank, we show that an existing deposit account makes a household more likely to hold deposits at the same bank later despite better alternatives and more likely to borrow there. Consistent with this, banks...

We show that competing firms relax overall competition by lowering future barriers to entry. We illustrate our findings in a two-period model with adverse selection where banks strategically commit to disclose borrower information. By doing this, they invite rivals to enter their market....

Switching costs are a leading cause of customer lock-in in banking, reducing the extent of competition and increasing market power in this industry. This paper tries to estimate these costs using a methodology that does not require customer microdata. The estimates obtained here-using bank...

This paper attempts to evaluate the competitiveness of British banking in the presence of cross-selling and switching costs during 1993-2008. It presents estimates of a model of banking behaviour that encompasses switching costs as well as cross-selling of loans and offbalance sheet...

We establish that the effect of intensified deposit market competition, measured by reduced switching costs, on the probability of bank failures depends critically on whether we focus on competition with established customer relationships or competition for the formation of such relationships....

This paper studies the links between competition in the lending market and spreads of bank loans in Brazil. Evidence from a dataset of more than 13 million loan-level observations from private banks shows a positive relationship between market power, measured by the Lerner index, and the cost of...

We seek to evaluate the competitiveness of British banking in the presence of cross-selling and switching costs during 1993-2008. We estimate a model of banking behaviour that encompasses switching costs as well as cross-selling of loans and off-balance sheet transactions. The evidence from...

Switching costs are a key determinant of market performance. This paper tests their existence in the corporate loan market in which they are likely to play a central role because of the complexity of contracts and the relevance of informational problems. Using very detailed data at bank – firm...