Retail banking in the aftermath of the financial crisis

Abstract

This thesis considers the effects of the global financial crisis that started in 2008 on the retail banking environment and on banks’ behavior during and in the aftermath of the crisis. The thesis consists of an introductory chapter and three empirical articles that use unique datasets on Finnish cooperative banks. The introductory chapter provides background and an overview of the thesis and considers the effects of the crisis on retail banking from an overall perspective. The empirical articles investigate the roles of a competitive environment, a low interest rate environment, and relationship banking during the crisis and in the post-crisis period. The first article looks at whether the effects of the financial crisis on the volumes and prices of small-business loans depended on the pre-crisis local competitive environment. The second article explores the relationship between market interest rates and retail bank interest margins and its implications in the low interest rate environment that resulted from the financial crisis. The third article examines the association of bank relationship strength with the performance of small and medium-sized enterprises (SMEs) after the onset of the financial crisis.