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Federal Reserve Bank of Chicago
Working Paper Series
Advertising and pricing at multiple-output firms: evidence from U.S. thrift institutions
Robert DeYoung
Evren Örs
Abstract

We derive five hypotheses regarding market competition, price, and advertising from a theoretical model of a profit maximizing depository institution, and test these conjectures in a simultaneous system of deposit interest rates and advertising expenditures for a data panel of 1,867 thrift institutions that offer 13 different deposit products in 666 local markets in the U.S. between 1994 and 2000. We find some support for each of our hypotheses – branding, information, Dorfman-Steiner, structure-advertising, and structure-price – with the strength of the results often depending on the attributes of the deposit products or the characteristics of the thrifts.


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Robert DeYoung & Evren Örs, Advertising and pricing at multiple-output firms: evidence from U.S. thrift institutions, Federal Reserve Bank of Chicago, Working Paper Series WP-04-25, 2004.
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Keywords: Advertising ; Thrift institutions
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