Foreign fees and customers'cash withdrawals

Résumé

In this paper, we evaluate the impact of foreign fees, paid by consumers when they withdraw cash at banks that are not their own, on their withdrawals. We take advantage of a natural experiment whereby (non linear) payment fees for withdrawing cash at foreign ATMs were introduced at one point in time. We also use this experiment to evaluate the substitutions between foreign withdrawals and various other means of payment such as own bank or desk withdrawals, payments by card or cheque. Using panel data on accounts at one specific bank, we first estimate reduced form treatment effect models before carrying on with the estimation of a structural model. The latter allows us to compute the counterfactual impacts of changing the non linear schedule of foreign fees. Impacts are sizeable and in particular on bank profits.

Mots-clés

Cash holding; policy evaluation; costs of means of payment; treatment effects;

Codes JEL

C21: Cross-Sectional Models • Spatial Models • Treatment Effect Models • Quantile Regressions
D12: Consumer Economics: Empirical Analysis
G21: Banks • Depository Institutions • Micro Finance Institutions • Mortgages