Abstract

We analyze how rebranding affects depositor discipline in a sample of Turkish banks. Depositor discipline refers to the empirical regularity that banks with higher capitalization attract more deposits at lower cost. Bank rebranding tends to increase depositor discipline, especially when there is only a small cosmetic change to the name. Rebranding a Turkish named bank into a foreign named one is associated with increased depositor discipline. In a similar manner, depositor discipline tends to decrease in the short-run if the bank rebrands from a foreign name to a Turkish one. These results suggest the presence of depositor ethnocentrism. Our main findings are robust to controls for major ownership changes and for selection effects.

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