Credit card use after the final mortgage payment: does the magnitude of income shocks matter?

We test the hypothesis that consumption smoothing occurs after large, but not small, expected future income shocks. Even though this hypothesis has often been discussed, formal evidence in support of it is rare. We use individual level, monthly, bank account data to examine how expected income shocks from final mortgage payments impact credit card consumption, and the repayment of credit card debt. Our data allows us to identify the exact magnitude and date of final mortgage payments, and also to exploit the random timing of these expected income shocks across individuals. Our results are consistent with the magnitude hypothesis. JEL Classification:credit card, final mortgage payment, income shocks, monthly mortgage account

Monetary Policy News and Exchange Rate Responses: Do Only Surprises Matter?

This paper shows that exchange rates respond to only the surprise component of an actual US monetary policy change and that failure to disentangle the surprise component from the actual monetary policy change can lead to an underestimation of the impact of monetary policy, or even to a false acceptance of the hypothesis that monetary policy has no impact on exchange rates. This finding implies that there is a need for reexamining the empirical analyses of asset price responses to macro news that do not isolate the unexpected component of news from the expected element. In addition, we add to the debate on how quickly exchange rates respond to news by showing that the exchange rates under study absorb monetary policy surprises within the same day as the news are announced.expectations; monetary policy; federal funds futures; exchange rates

Do Exchange Rates Respond to Day-to-Day Changes in Monetary Policy Expectations? Evidence from the Federal Funds Futures Market.

This paper is the first to utilize the informational content embodied in Federal funds futures contracts for extracting day-to-day changes in expectations of future US monetary policy, in the context of a study of day-to-day exchange rate changes. We analyze more than 12 years of daily exchange rate data and show that continuous day-to-day changes in expectations of future US monetary policy has a significant and systematic impact on day-to-day changes in exchange rates. Our results imply that monetary policy matters for daily exchange rate determination in more ways than merely through infrequent, actual policy changes. Furthermore, when focusing on the actual monetary policy changes, the paper confirms that only the unexpected element of a policy change impacts exchange rates. The presented findings are generally consistent with the notion that exchange rates are forward-looking asset prices.expectations, monetary policy; federal funds futures; exchange rates

Is There a Customer Relationship Effect from Bank ATM Surcharges?

This paper investigates the use of ATM surcharges as a strategic device to increase bank profitability. We show that ATM surcharge changes can have both a direct effect on bank profitability and an indirect effect via customer switching and a related customer relationship effect. That is, customer switching results in an increase in the demand for other services provided by the surcharge-increasing bank. Using unique databases, we provide evidence to show that overall bank profitability is favorably affected by surcharge increases. We also show evidence supporting the existence of an indirect effect, especially for larger banks

Is There a Customer Relationship Effect from Bank ATM Surcharges?

This paper investigates the use of ATM surcharges as a sategic device to increase bank profitability. We show that ATM surcharge changes can have both a direct effect on bank profitability and an indirect effect via customer switching and a related customer relationship effect. That is, customer switching results in an increase in the demand for other services provided by the surcharge increasing bank. Using unique data bases, we provide evidence to show that overall bank profitability is favorably affected by surcharge increases. We also show evidence supporting the existence of an indirect effect, especially for larger banks

Is There a Customer Relationship Effect from Bank ATM Surcharges?

This paper investigates the use of ATM surcharges as a strategic device to increase bank profitability. We show that ATM surcharge changes can have both a direct effect on bank profitability and an indirect effect via customer switching and a related customer relationship effect. That is, customer switching results in an increase in the demand for other services provided by the surcharge-increasing bank. Using unique databases, we provide evidence to show that overall bank profitability is favorably affected by surcharge increases. We also show evidence supporting the existence of an indirect effect, especially for larger banks

Is There a Customer Relationship Effect from Bank ATM Surcharges?

This paper investigates the use of ATM surcharges as a sategic device to increase bank profitability. We show that ATM surcharge changes can have both a direct effect on bank profitability and an indirect effect via customer switching and a related customer relationship effect. That is, customer switching results in an increase in the demand for other services provided by the surcharge increasing bank. Using unique data bases, we provide evidence to show that overall bank profitability is favorably affected by surcharge increases. We also show evidence supporting the existence of an indirect effect, especially for larger banks

Monetary Policy News and Exchange Rate Responses: Do Only Surprises Matter?

This paper shows that exchange rates respond to only the surprise component of an actual US monetary policy change and that failure to disentangle the surprise component from the actual monetary policy change can lead to an underestimation of the impact of monetary policy, or even to a false acceptance of the hypothesis that monetary policy has no impact on exchange rates. This finding implies that there is a need for reexamining the empirical analyses of asset price responses to macro news that do not isolate the unexpected component of news from the expected element. In addition, we add to the debate on how quickly exchange rates respond to news by showing that the exchange rates under study absorb monetary policy surprises within the same day as the news are announced