Spatial Competition with Online Platforms: An Empirical Analysis of the Wealth Management Product Market

87 Pages Posted: 18 Aug 2022

See all articles by Chao Ma

Chao Ma

WISE & SOE, Xiamen University

Shuoxun Zhang

Sichuan University

Date Written: August 12, 2022

Abstract

We study wealth management products (WMPs) issued by banks and find higher prices online than offline. The explanation is: banks must charge lower prices at physical branches to compensate customers for traveling costs. The online-offline price gaps decrease with the share of online-banking users, the number of incumbent banks, and a bank’s branch density and clustering. WMP markets provide an ideal scenario to identify the effect of spatial competition on the online-offline spread because online and offline channels for issuing WMPs (selling financial products) do not differ in delivery, search, or waiting costs or the convenience of inspecting product quality.

Keywords: Digital economy, Digital finance, Spatial competition, Online prices, Banking

JEL Classification: G2, G5, L1, L8, R1

Suggested Citation

Ma, Chao and Zhang, Shuoxun, Spatial Competition with Online Platforms: An Empirical Analysis of the Wealth Management Product Market (August 12, 2022). Available at SSRN: https://ssrn.com/abstract=4188371 or http://dx.doi.org/10.2139/ssrn.4188371

Chao Ma (Contact Author)

WISE & SOE, Xiamen University ( email )

A 307, Economics Building
Xiamen, Fujian 10246
China

Shuoxun Zhang

Sichuan University ( email )

29 Wangjiang Road
Business School
Sichuan University, 610064
China

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