Essays in banking and household finance

The thesis consists of four chapters in banking and household finance. The first chapter examines the joint impact of bank size and scope on banks’ exposure to systemic risk. It shows that the dark side of diversification dominates for small banks, whereas the bright side effects of diversification and innovation dominate for medium and large banks. The second chapter provides insight in consumer bank switching behaviour. It outlines the most important factors in explaining variation in switching propensities for switching with the main savings account, current account and mortgage loan. Besides, it documents barriers that withhold people from switching and sheds light on (hypothetical) policy initiatives to facilitate switching. The third chapter studies bank switching behaviour after government interventions. Although aggregate switching behaviour did not change after the troubles and bail-outs, there is heterogeneity in customer responses. Customers with low levels of trust in the government are more likely to switch away after a nationalisation. Moreover, risk-averse current account holders are more likely to leave the nationalised bank. The last chapter is on savings behaviour. It shows that the socio-economic dimension, parental teaching, household administration skills, personality factors and the social circle are all related to savings. The socio-economic dimension and the social circle are most important in explaining variation in savings behaviour, irrespective of how savings behaviour is measured.