Publication Type
Working Paper
Version
publishedVersion
Publication Date
12-2024
Abstract
We study how digital disruption impacts bank competition, considering consumers’ heterogeneous digital preferences. We find that the rollout of 3G networks contracts bank branch networks and leads to divergence in branching and pricing strategies across banks. These developments benefit young consumers but increase the unbanked rate for poorer and older consumers. A structural model shows that the higher perceived digital quality by younger borrowers mainly prompts these adjustments, causing significant surplus losses for older savers. Counterfactual exercises illustrate that subsidizing older savers opting for mobile banking effectively offsets these disparities at minimal cost, facilitating a smoother digital transition.
Keywords
technology, bank competition, consumer preference, digital inequality, financial inclusion
Discipline
Finance | Finance and Financial Management
Research Areas
Finance
Areas of Excellence
Growth in Asia
First Page
1
Last Page
87
Publisher
Singapore Management University, Sim Kee Boon Institute for Financial Economics
City or Country
Singapore
Embargo Period
1-22-2025
Citation
JIANG, Erica Xuewei; YU, Yang Gloria; and ZHANG, Jinyuan.
Bank competition amid digital disruption: Implications for financial inclusion. (2024). 1-87.
Available at: https://ink.library.smu.edu.sg/skbi/48
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
