| By: |
Agnese Carella (Bank of Italy);
Valentina Michelangeli (Bank of Italy) |
| Abstract: |
The role, informative or persuasive, of brand names in driving purchasing
decisions is very much under debate. We exploit the rebranding of a mortgage
lender to analyse households’ choice behaviour in response to brand
popularity. Loan-level data on new mortgages suggest that (1) brand awareness
reduces the equilibrium price of residential mortgage contracts and (2) the
reduction mainly reflects consumers’ selection of cheaper products due to
better information. Our calibrated model implies an overall gain equal to 6
per cent of the initial loan amount and a roughly 10 percentage point increase
in the share of households that shift to cheaper lenders. |
| Keywords: |
brand, mortgages, household finance |
| JEL: |
D12 D15 D83 G21 G51 |
| Date: |
2021–06 |
| URL: |
http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1340_21&r= |