Deposit Mobilization Through Financial Restraint

Graduate School of Business Research Paper No. 1354

Sauder School of Business Working Paper

Posted: 9 Jul 1998

See all articles by Thomas F. Hellmann

Thomas F. Hellmann

University of Oxford - Said Business School; University of Oxford - Said Business School

Kevin C. Murdock

McKinsey & Company and Stanford Graduate School of Business

Date Written: August 2002

Abstract

This paper asks the question under what circumstances banks have incentives to increase the deposit collection, when the deposit market is not fully penetrated, i.e. when there is low financial depths. We compare outcomes under a perfectly competitive deposit market with outcomes under financial restraint, defined as a combination of deposit rate controls and restrictions on competition. In the first model we show that temporary exclusive rights may be an efficient way of inducing banks to open branches in new areas. In the second model we show that deposit rate controls can provide banks with stronger incentives to seek out new depositors, and thus to grow the deposit market. This paper represents the views of the authors and does not necessarily represent that of any organization with which they are or have been affiliated.

JEL Classification: G21, G28, O16

Suggested Citation

Hellmann, Thomas F. and Murdock, Kevin C., Deposit Mobilization Through Financial Restraint (August 2002). Graduate School of Business Research Paper No. 1354; Sauder School of Business Working Paper. Available at SSRN: https://ssrn.com/abstract=7177

Thomas F. Hellmann (Contact Author)

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain
+44 (0)1865 288937 (Phone)

HOME PAGE: http://www.sbs.ox.ac.uk/community/people/thomas-hellmann

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain
+44 (0)1865 288937 (Phone)

HOME PAGE: http://www.sbs.ox.ac.uk/community/people/thomas-hellmann

Kevin C. Murdock

McKinsey & Company and Stanford Graduate School of Business ( email )

21 S. Clark Street
Suite 2900
Chicago, IL 60603
United States
312-795-7286 (Phone)
253-369-2648 (Fax)

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
1,272
PlumX Metrics