Center for Data Science Talk

Topic Optimizing Bank Overdraft Fees with Big Data In 2012, consumers paid US$ 32 billion in overdraft fees, which represent the single largest source of revenue for banks from demand deposit accounts during this period. Owing to consumer attrition caused by high overdraft fees and potential government regulations to reform these fees, financial institutions have become motivated to investigate their overdraft fee structures. Banks need to balance the revenue generated from overdraft fees with consumer dissatisfaction and potential churn caused by overdraft fees. However, no empirical research has been conducted to explain consumer responses to overdraft fees and evaluate alternative pricing and product strategies associated with these fees. Professor Xiao Liu proposes a dynamic structural model with consumer monitoring costs and dissatisfaction associated with overdraft fees. Xiao Liu joined New…

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