The influence of product age on pricing decisions: An examination of bank deposit interest rate setting

Robert D.J. Anderson*, John K. Ashton, Robert S. Hudson

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


Do banks extract rent from depositors who hold older deposit accounts? This study addresses this question using product level data from the UK instant access (branch based) deposit market. In this context, two research questions related to the conditions necessary for differential pricing for existing and new customers are assessed. Specifically whether more mature deposit accounts have lower interest rates and does the newest deposit account in a firm portfolio pay an interest rate premium? Empirical support is provided for both questions, with interest rate setting for new and existing deposit accounts also found to be influenced by firm type.

Original languageEnglish
Pages (from-to)216-230
Number of pages15
JournalJournal of International Financial Markets, Institutions and Money
Issue number1
Early online date3 Apr 2014
Publication statusPublished - 1 Jul 2014

Bibliographical note

Funding Information:
The authors are grateful for helpful suggestions made by participants at the British Accounting Association Conference, Cardiff, March 2010; the Wolpertinger Conference, University of Bangor, September 2010; the 4th International Conference on Computational and Financial Econometrics, University College London, December 2010; the Behavioural Finance and Economic Psychology: Recent Developments Conference, Cass Business School, April 2011; the 2nd International Conference of the Financial Engineering and Banking Society, ESCP Europe Business School in London, June 2012; and attendees at research seminars at the University of Keele Management School and the University of Sheffield Management School. The usual disclaimer applies that all errors and omissions are entirely the responsibility of the authors. The third author would also like to acknowledge financial assistance from the Nuffield Foundation , under award RES/0371/7216 .


  • Deposits
  • Interest rate setting
  • Switching
  • UK retail savings market

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