Doctor of Philosophy (PhD)


Department of Finance

Document Type



Studying deposit market competition is crucial for ensuring competitive rates, identifying potential risks, and identifying opportunities for growth and innovation in the banking sector. It helps attract and retain customers during economic uncertainty, reduces the risk of systemic failures, and encourages banks to develop new products and services. The current banking crisis emphasizes the significance of competition in the banking industry. Large banks' risky behavior due to their market power and size can exacerbate the financial crisis. Studying deposit market competition can promote a competitive and transparent environment and prevent future crises.

In Chapter 1, I investigate how local market competition and monetary policy affect the dispersion of deposit prices among banks in the same market. Utilizing regulatory reforms across different states in the US that allowed inter-state banking and branching, the study finds that local market concentration has a negative effect on deposit price dispersion. However, the effect is not monotonic, and price dispersion increases in less concentrated markets due to branch entry. The study also identifies a significant cyclical component in deposit price dispersion, indicating that the flow of monetary policy is impeded by deposit market power greatly in tightening regimes. The effect of deposit market power is more benign in a loosening regime.

In Chapter 2, foot traffic data from cell phone devices is utilized to study the impact of distance between a bank and its customers on deposit product pricing. The study finds that the banks provide lower interest rate (price) to the distant customer; this price-distance relationship exists only in a highly concentrated market, consistent with the exercise of market power. Furthermore, paying lower rates for deposits sourced from distant customers translates into higher bank profitability. These findings highlight the presence of locational rents in the deposit market, contributing to a bank's deposit franchise value.



Committee Chair

Narayanan, Rajesh P.



Available for download on Monday, April 01, 2030