Keywords: ATMs surcharge competition
Abstract: It is frequently claimed that high ATM surcharges actually attract customers to the banks
that impose them, particularly if they operate large ATM networks. By exploiting as "natural
experiments" two events associated with the lifting of surcharge bans in Iowa and in the states
that neighbor Iowa, this paper seeks to test for the implications of this phenomenon as it applies
to the market shares of banking institutions and to several aspects of market structure.
Consistent with these implications, results of "difference-in-difference" analyses suggest
that the shares of larger market participants increase, the shares of smaller market participants
decrease, market concentration increases, and the number of market competitors decreases after the
lifting of surcharge bans.
Full paper (189 KB PDF)
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Last update: October 6, 2005