Bank Fees, Aftermarkets, and Consumer Behavior

36 Pages Posted: 22 May 2017

See all articles by Robert M. Adams

Robert M. Adams

Board of Governors of the Federal Reserve System

Date Written: 2017-05


Fees for banking services have been a policy concern for over 20 years and the subject of several government agencies studies, which focused on the magnitude, incidence, or disclosure of such fees. Using a sample of single market banks, I study the relationship between market-level consumer characteristics and bank fee revenue, fees, and bank return on assets (ROA) to infer consumer and firm behavior. Of particular interest, I use county-level IRS tax records as a measure of the consumer income distribution, but my analysis also includes measures of age and education distributions. I find very little evidence that banks are systematically charging higher aftermarket fees in counties with greater proportions of younger, less educated, or poorer households. Standard measures of competition such as the Herfindahl-Hirschmann Index of deposit concentration are correlated with fees for base checking accounts, but not correlated with aftermarket product fees. Finally, st ate-wide restrictions on payday lending are correlated with higher bank fees, but not with increased bank revenue or ROA.

Keywords: Aftermarkets, Banking, Competition, Overdraft fees

JEL Classification: G2, L1, L4

Suggested Citation

Adams, Robert M., Bank Fees, Aftermarkets, and Consumer Behavior (2017-05). FEDS Working Paper No. 2017-054, Available at SSRN: or

Robert M. Adams (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States
202-452-2653 (Phone)

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