The presence of sticky, often labelled ‘unengaged', consumers is arguably one of the most intractable issues faced by competition regulators, in that it entrenches incumbency advantage. We develop a spatial linear model of heterogeneous switching costs that allows for asymmetric distributions...

The paper develops a static model to explore how, under platform competition, heterogeneous levels of switching costs can give rise to an incumbency advantage. The key condition required for the coexistence of both platforms on the market, to have effective competition, relies on the relative...

The presence of sticky, often labelled ‘unengaged', consumers is arguably one of the most intractable issues faced by competition regulators, in that it entrenches incumbency advantage. We develop a spatial linear model of heterogeneous switching costs that allows for asymmetric distributions...

When settling their own liabilities and those of their clients, settlement banks rely on incoming payments to fund a part of their outgoing payments. We investigate their behaviour in CHAPS, the United Kingdom’s large-value payment system. Our estimates suggest that in normal times, banks...

The large-value payment system in the United Kingdom (CHAPS) is highly tiered: a few settlement banks make payments on behalf of many customer banks. This paper makes use of a simulation approach to quantify by how much tiering affects, on the one hand, concentration and credit risk and, on the...

We use a DSGE model with financial frictions, leverage limits on banks, loan to value (LTV) limits and debt‑service ratio (DSR) limits on mortgage borrowing to examine: i) the effects of different macroprudential policies on key macro aggregates; ii) their interaction with each other and with...

Using quarterly data on FAS 157 fair value disclosures for US bank holding companies from 2008 to 2013, we test whether capital ratios and the effects of market discipline differ according to extent and nature of assets recognized under Level 3 standards. These standards offer management...

Using quarterly data on FAS 157 fair value disclosures for US bank holding companies from 2008 to 2013, we test whether capital ratios and the effects of market discipline differ according to extent and nature of assets recognized under Level 3 standards. These standards offer management...

This paper studies the impact of trading profits and losses on bank counter-party borrowing costs using data from a derivatives trade depositary. We use the network of credit default swap CDS) transactions between banks to identify bank CDS returns attributable to counter-party losses. Any...

Since Basel II was introduced in 2008, two approaches to calculating bank capital requirements have co-existed: lenders' internal models, and a less risk-sensitive standardised approach. Using a unique dataset covering 7 million UK mortgages for 2005–15, and novel identification, we provide...