Bank Competition and Bargaining over Refinancing

Marina Emiris; François Koulischer; Christophe Spaenjers

doi:10.1093/rcfs/cfaf002

Bank Competition and Bargaining over Refinancing

Marina Emiris¹; François Koulischer²; Christophe Spaenjers³

¹ National Bank of Belgium, Belgium · ² University of Luxembourg, Luxembourg · ³ Leeds School of Business, University of Colorado Boulder , USA

The Review of Corporate Finance Studies 2026 open access

Abstract We model mortgage refinancing as a bargaining game involving the borrowing household, the incumbent lender, and outside banks. We show that bargaining can provide a competitive advantage to the incumbent bank. In equilibrium, the borrower’s ability to refinance depends on the incumbent bank’s cost (dis)advantage relative to locally present competing banks and on the average creditworthiness of borrowers in the relevant market. It is also driven by borrower impatience and switching costs. We find empirical support for the key predictions of our model in an administrative data set covering the universe of mortgages in Belgium. (JEL G11, G21, G51)

DOI: 10.1093/rcfs/cfaf002
Volume: 15 (2)
Pages: 392-426
Language: en
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