Maverick Firms: An Exploratory Analysis of Mortgage Providers in Australia

Breunig, Robert and Menezes, Flavio (2007). Maverick Firms: An Exploratory Analysis of Mortgage Providers in Australia. Discussion Paper No. 348, School of Economics, The University of Queensland.

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Author Breunig, Robert
Menezes, Flavio
Title Maverick Firms: An Exploratory Analysis of Mortgage Providers in Australia
School, Department or Centre School of Economics
Institution The University of Queensland
Open Access Status Other
Series Discussion Paper
Report Number No. 348
Publication date 2007-08
Language eng
Subject 340203 Finance Economics
Abstract/Summary This paper develops an empirical strategy to measure maverick-like behaviour. It applies the strategy to a dataset that contains interest rates charged by mortgage providers in Australia from January 2003 to October 2006. The Reserve Bank of Australia raised its cash rate five times in this period, which provides a natural setting to observe suppliers' responses. We examine suppliers’ behaviour both in terms of the rates they charge and the time it takes them to change their rates as a response to a systemic increase in costs. These empirical observations suggest that the development of a theory for maverick behaviour be focused on dynamic, asymmetric models and informed by institutions and market dynamics that are relevant to the case at hand.
Keyword competition analysis
maverick firms
mortgage providers
interest rates
houring loans

Document type: Working Paper
Collection: Discussion Papers (School of Economics)
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