Instant Payment Systems and Competition for Deposits

108 Pages Posted: 4 Aug 2022 Last revised: 27 Mar 2024

See all articles by Sergey Sarkisyan

Sergey Sarkisyan

The Wharton School, University of Pennsylvania

Date Written: March 17, 2024


I study how financial technology reshapes competition among banks. I exploit quasi-random variation in exposure to the introduction of Brazil's Pix, an instant payment system, and show that instant payments increase deposit competition. Small bank deposits rise relative to large banks because Pix allows small banks to offer greater payment convenience to depositors. Since they become more competitive in the provision of payment services, small banks reduce deposit rates relative to large banks. Finally, I estimate a deposit demand model and find that depositors' welfare increases with Pix. These findings suggest that universally available payment systems can foster banking competition.

Keywords: Deposit market competition, instant payment systems, banking, Pix

JEL Classification: E42, G21, G11, E58

Suggested Citation

Sarkisyan, Sergey, Instant Payment Systems and Competition for Deposits (March 17, 2024). Jacobs Levy Equity Management Center for Quantitative Financial Research Paper, Available at SSRN: or

Sergey Sarkisyan (Contact Author)

The Wharton School, University of Pennsylvania ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States

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