Strategic incompatibility in ATM markets
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Knittel_Strategic incompatability.pdf
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Author(s)
Stango, Victor
Knittel, Christopher Roland
Date Issued
March 2011
Journal
Journal of Banking & Finance
Publisher
Elsevier
Citation
Knittel, Christopher R., and Victor Stango. “Strategic Incompatibility in ATM Markets.” Journal of Banking & Finance 35, no. 10 (October 2011): 2627–2636.
Version
Author's final manuscript
Abstract
We test whether firms use incompatibility strategically, using data from ATM markets. High ATM fees degrade the value of competitors’ deposit accounts, and can in principle serve as a mechanism for siphoning depositors away from competitors or for creating deposit account differentiation. Our empirical framework can empirically distinguish surcharging motivated by this strategic concern from surcharging that simply maximizes ATM profit considered as a stand-alone operation. The results are consistent with such behavior by large banks, but not by small banks. For large banks, the effect of incompatibility seems to operate through higher deposit account fees rather than increased deposit account base.
MIT Department
Sloan School of Management
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Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
https://doi.org/10.1016/j.jbankfin.2011.02.021
