[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/fip/fedbne/y1999imarp3-14.html
   My bibliography  Save this article

Checking accounts: what do banks offer and what do consumers value?

Author

Listed:
  • Joanna Stavins
Abstract
Recent evidence shows that the supply of deposits to checking accounts is not elastic with respect to the interest rates paid. That suggests that various features attached to checking accounts may be important in determining the supply of deposits and banks' and revenues from the fees. This study uses a national survey of checking accounts offered by financial institutions in 25 major metropolitan areas in the United States to analyze the effects of restrictions and fees imposed on checking account holders on the supply of deposits and on the banks' check fee revenues. The author places particular emphasis on relatively new restrictions designed to induce customers to adopt cost-saving behavior, such as restrictions on the return of canceled checks and on the use of live tellers. She finds the supply of deposits into checking accounts to be responsive to the bank's per-item fees, check return restrictions, teller restrictions, and foreign ATM fees. Because of this sensitivity of deposit supply, raising most of those fees was found to lower bank revenues from servicing the checking accounts. Only the fee on check return and the NSF fee were found to significantly raise bank revenues.

Suggested Citation

  • Joanna Stavins, 1999. "Checking accounts: what do banks offer and what do consumers value?," New England Economic Review, Federal Reserve Bank of Boston, issue Mar, pages 3-14.
    • Handle: RePEc:fip:fedbne:y:1999:i:mar:p:3-14
    as

    Download full text from publisher

    File URL: http://www.bostonfed.org/economic/neer/neer1999/neer299a.htm
    Download Restriction: no
    File URL: http://www.bostonfed.org/economic/neer/neer1999/neer299a.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Garth Saloner & Andrea Shepard, 1995. "Adoption of Technologies with Network Effects: An Empirical Examination of the Adoption of Teller Machines," RAND Journal of Economics, The RAND Corporation, vol. 26(3), pages 479-501, Autumn.
    2. Amel, Dean F. & Hannan, Timothy H., 1999. "Establishing banking market definitions through estimation of residual deposit supply equations," Journal of Banking & Finance, Elsevier, vol. 23(11), pages 1667-1690, November.
    3. Joanna Stavins, 1997. "A comparison of social costs and benefits of paper check presentment and ECP with truncation," New England Economic Review, Federal Reserve Bank of Boston, issue Jul, pages 27-44.
    4. Martin Mayer, 1996. "The past is a lousy prologue: payments systems innovations and the Fed," Proceedings, Board of Governors of the Federal Reserve System (U.S.), pages 975-979.
    5. Arthur B. Kennickell & Martha Starr-McCluer & Annika E. Sunden, 1997. "Family Finance in the U.S.: Recent Evidence from the Survey of Consumer Finances," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), vol. 83(1), pages .1-24, January.
    6. David B. Humphrey, 1994. "Delivering deposit services: ATMs versus branches," Economic Quarterly, Federal Reserve Bank of Richmond, issue Spr, pages 59-81.
    7. Mayer, Martin, 1996. "The Past Is a Lousy Prologue: Payments Systems Innovations and the Fed," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(4), pages 975-979, November.
    8. James J. McAndrews, 1991. "The evolution of shared ATM networks," Business Review, Federal Reserve Bank of Philadelphia, issue May, pages 3-16.
    9. Kenneth C. Carraro & Daniel L. Thornton, 1986. "The cost of checkable deposits in the United States," Review, Federal Reserve Bank of St. Louis, issue Apr, pages 19-27.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Cara S. Lown & Stavros Peristiani & Kenneth J. Robinson, 1999. "What was behind the M2 breakdown?," Financial Industry Studies Working Paper 99-2, Federal Reserve Bank of Dallas.
    2. Victor Stango & Jonathan Zinman, 2014. "Limited and Varying Consumer Attention: Evidence from Shocks to the Salience of Bank Overdraft Fees," The Review of Financial Studies, Society for Financial Studies, vol. 27(4), pages 990-1030.
    3. Brian Mantel, 2000. "Why don't consumers use electronic banking products? towards a theory of obstacles, incentives, and opportunities," Occasional Paper; Emerging Payments EPS-2000-1, Federal Reserve Bank of Chicago.
    4. Knittel Christopher R. & Stango Victor, 2008. "Incompatibility, Product Attributes and Consumer Welfare: Evidence from ATMs," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-42, January.
    5. Marvin Goodfriend, 2000. "Overcoming the zero bound on interest rate policy," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, pages 1007-1057.
    6. Zinman, Jonathan, 2009. "Debit or credit?," Journal of Banking & Finance, Elsevier, vol. 33(2), pages 358-366, February.
    7. Christopher R. Knittel & Victor Stango, 2003. "Compatibility and pricing with indirect network effects: evidence from ATMs," Working Paper Series WP-03-33, Federal Reserve Bank of Chicago.
    8. Brian Mantel, 2000. "Why do consumers pay bills electronically? an empirical analysis," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 25(Q IV), pages 32-48.
    9. Mark D. Manuszak & Krzysztof Wozniak, 2017. "The Impact of Price Controls in Two-sided Markets : Evidence from US Debit Card Interchange Fee Regulation," Finance and Economics Discussion Series 2017-074, Board of Governors of the Federal Reserve System (U.S.).
    10. Christopher R. Knittel & Victor Stango, 2003. "Compatibility and pricing with indirect network effects: evidence from ATMs," Working Paper Series WP-03-33, Federal Reserve Bank of Chicago.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hancock, Diana & Humphrey, David B., 1997. "Payment transactions, instruments, and systems: A survey," Journal of Banking & Finance, Elsevier, vol. 21(11-12), pages 1573-1624, December.
    2. Fuentelsaz, Lucio & Gómez, Jaime & Palomas, Sergio, 2016. "Interdependences in the intrafirm diffusion of technological innovations: Confronting the rational and social accounts of diffusion," Research Policy, Elsevier, vol. 45(5), pages 951-963.
    3. Timothy H. Hannan & Elizabeth K. Kiser & Robin A. Prager & James J. McAndrews, 2003. "To Surcharge or Not to Surcharge: An Empirical Investigation of ATM Pricing," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 990-1002, November.
    4. Donald D. Hester & Giorgio Calcagnini & Riccardo De Bonis, 2001. "Competition Through Innovation: ATMs in Italian Banks," Rivista italiana degli economisti, Società editrice il Mulino, issue 3, pages 359-382.
    5. Fumiko Hayashi & Zhu Wang, 2008. "Product innovation and network survival in the U.S. ATM and debit card network industry," Research Working Paper RWP 08-14, Federal Reserve Bank of Kansas City.
    6. repec:zbw:bofism:2006_038 is not listed on IDEAS
    7. David B. Humphrey, 1996. "The economics of electronic benefit transfer payments," Economic Quarterly, Federal Reserve Bank of Richmond, issue Spr, pages 77-94.
    8. Kenneth Carow & Michael Staten, 2002. "Plastic choices: Consumer usage of bank cards versus proprietary credit cards," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 26(2), pages 216-232, June.
    9. Snellman, Heli, 2006. "Automated teller machine network market structure and cash usage," Scientific Monographs, Bank of Finland, number 2006_038.
    10. Loretta J. Mester, 2000. "The changing nature of the payments system: should new players mean new rules?," Business Review, Federal Reserve Bank of Philadelphia, issue Mar, pages 3-26.
    11. Fuentelsaz, Lucio & Gómez, Jaime & Palomas, Sergio, 2012. "Production technologies and financial performance: The effect of uneven diffusion among competitors," Research Policy, Elsevier, vol. 41(2), pages 401-413.
    12. Guibourg, Gabriela, 2001. "Interoperability and Network Externalities in Electronic Payments," Working Paper Series 126, Sveriges Riksbank (Central Bank of Sweden).
    13. Feng, Yao, 2011. "Local spillovers and learning from neighbors: Evidence from durable adoptions in rural China," MPRA Paper 33924, University Library of Munich, Germany.
    14. John Geanakoplos & Olivia S. Mitchell & Stephen P. Zeldes, "undated". "Social Security Money's Worth," Pension Research Council Working Papers 97-20, Wharton School Pension Research Council, University of Pennsylvania.
    15. John Geanakoplos & Olivia S. Mitchell & Stephen P. Zeldes, "undated". "Would a Privatized Social Security System Really Pay a Higher Rate of Return?," Pension Research Council Working Papers 98-6, Wharton School Pension Research Council, University of Pennsylvania.
    16. Davide Consoli & Pier Paolo Patrucco, 2011. "Complexity and the Coordination of Technological Knowledge: The Case of Innovation Platforms," Chapters, in: Handbook on the Economic Complexity of Technological Change, chapter 8 Edward Elgar Publishing.
    17. Jeremy Berkowitz & Richard Hines, 1998. "Bankruptcy exemptions and the market for mortgage loans," Finance and Economics Discussion Series 1998-07, Board of Governors of the Federal Reserve System (U.S.).
    18. Scholnick, Barry & Massoud, Nadia & Saunders, Anthony & Carbo-Valverde, Santiago & Rodríguez-Fernández, Francisco, 2008. "The economics of credit cards, debit cards and ATMs: A survey and some new evidence," Journal of Banking & Finance, Elsevier, vol. 32(8), pages 1468-1483, August.
    19. Donal G. MCKILLOP & Barry QUINN, 2015. "Web Adoption By Irish Credit Unions: Performance Implications," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 86(3), pages 421-443, September.
    20. Corvoisier, Sandrine & Gropp, Reint, 2002. "Bank concentration and retail interest rates," Journal of Banking & Finance, Elsevier, vol. 26(11), pages 2155-2189, November.
    21. Jin‐Hyuk Kim & Peter Newberry & Liad Wagman & Ran Wolff, 2022. "Local Network Effects in the Adoption of a Digital Platform," Journal of Industrial Economics, Wiley Blackwell, vol. 70(3), pages 493-524, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedbne:y:1999:i:mar:p:3-14. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Spozio (email available below). General contact details of provider: https://edirc.repec.org/data/frbbous.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.