Cross-Selling in Bank-Household Relationships: Mechanisms and Implications for Pricing

Abstract We show that banks cross-sell future deposits and loans to existing household depositors. A bank is 20-percentage-points more likely sell a loan an depositor than otherwise comparable household. Existing depositors pay premium when borrowing, we find no indication obtain informational advantage on such borrowers, suggesting the cross-selling driven by demand supply complementarities. These complementarities are in turn stickiness rather unobserved persistent preferences. Finally, internalize potential setting deposit rates.