The Determinants of Household's Bank Switching
39 Pages Posted: 17 Aug 2014 Last revised: 12 Nov 2015
Date Written: October 2015
We investigate the determinants of households’ bank switching in 2006-2012 period exploiting a unique representative dataset from Bank of Italy Survey on Household Income and Wealth that follows the households and their bank(s) over time. Focusing on the features of the household-bank relationship, we find that using more than a single bank, as well as the intensity (number of services used), and the scope (bank services used) of the relationship with the main bank also play a role in shaping the households’ decision to switch. Moreover, we find that this decision is strongly and positively correlated with both taking out and paying off a mortgage. We also find that education and financial literacy both matter for this decision, albeit with opposite effects and that, as expected, competition plays a role by increasing switching.
Keywords: household-bank relationship, switching cost, bank services
JEL Classification: G21; D14
Suggested Citation: Suggested Citation