Plausibly Exogenous [1717] - Financial Sophistication (10/15/2024)

LHS Variable
Bank funding costs

RHS Variable
Financial sophistication of bank customers

Source of Exogenous Variation
Cross-sectional variation across banks in the frequency of inconsistent pricing (many banks offer term structures of CD rates in which the rates for some tenors are actually dominated.)

- Fleckenstein and Longstaff (2024), “Financial Sophistication and Bank Market Power”