Advertising and Pricing at Multiple Output Firms: Evidence from U.S. Thrift Institutions

35 Pages Posted: 9 Apr 2005

See all articles by Robert DeYoung

Robert DeYoung

University of Kansas School of Business

Evren Ors

HEC Paris - Finance Department

Date Written: December 2004

Abstract

We derive five hypotheses regarding market competition, price, and advertising from a theoretical model of a profit maximizing depository institution, and test these conjectures in a simultaneous system of deposit interest rates and advertising expenditures for a data panel of 1,867 thrift institutions that offer 13 different deposit products in 666 local markets in the U.S. between 1994 and 2000. We find some support for each of our hypotheses - branding, information, Dorfman-Steiner, structure-advertising, and structure-price - with the strength of the results often depending on the attributes of the deposit products or the characteristics of the thrifts.

Keywords: Advertising, depository institutions, structure-performance

JEL Classification: G21, L1

Suggested Citation

DeYoung, Robert and Ors, Evren, Advertising and Pricing at Multiple Output Firms: Evidence from U.S. Thrift Institutions (December 2004). FRB of Chicago Working Paper No. 2004-25. Available at SSRN: https://ssrn.com/abstract=635647 or http://dx.doi.org/10.2139/ssrn.635647

Robert DeYoung (Contact Author)

University of Kansas School of Business ( email )

Capitol Federal Hall
1654 Naismith Drive
Lawrence, KS 66045
United States
785-864-1806 (Phone)

Evren Ors

HEC Paris - Finance Department ( email )

1 rue de la Liberation
Jouy-en-Josas Cedex, 78351
France
+33 1 3967 7123 (Phone)
+33 1 3967 7085 (Fax)

HOME PAGE: http://www.hec.fr/ors

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