Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/319215 
Year of Publication: 
2025
Series/Report no.: 
CESifo Working Paper No. 11847
Publisher: 
CESifo GmbH, Munich
Abstract: 
We provide empirical evidence on banks’ market power in financial services and its implications for monetary policy transmission through deposit rates. Banks with market power in financial services charge higher fees for their service and also offer lower deposit rates with less pass-through from monetary policy. We argue that this is the result of product tying: consumers must open a deposit account to access a bank’s financial services. We develop and calibrate a quantitative model of the U.S. banking industry where banks generate non-interest income from services in addition to a standard loan-deposit model. Counterfactuals emphasize the importance of non-interest income for credit supply, financial stability, and deposit pricing.
Subjects: 
monetary policy
banks
pass-through
market power
product tying.
JEL: 
D43
E44
E52
G21
G51
Document Type: 
Working Paper
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