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Banking consolidation and correspondent banking

Author

Listed:
  • William P. Osterberg
  • James B. Thomson

Abstract

Banking consolidation, spurred by interstate branching deregulation, is changing markets' competitive structure. Policymakers and regulators have focused on the implications for customers in retail and wholesale markets rather than consolidation's impact on correspondent banking markets (where banks buy and sell inputs used to produce banking services). By studying the era of intrastate branching deregulation, the authors provide some insights on the implications of interstate branching for correspondent banking.

Suggested Citation

  • William P. Osterberg & James B. Thomson, 1999. "Banking consolidation and correspondent banking," Economic Review, Federal Reserve Bank of Cleveland, issue Q I, pages 9-20.
    • Handle: RePEc:fip:fedcer:y:1999:i:qi:p:9-20
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    File URL: http://www.clevelandfed.org/Research/review/1999/99-q1-osterberg.pdf
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    References listed on IDEAS

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    1. John P. Segala & Bruce J. Summers, 1979. "Determinants of correspondent banking relationships with the Federal Reserve System," Working Paper 79-01, Federal Reserve Bank of Richmond.
    2. James B. Thomson & Walker F. Todd, 1990. "An insider's view of the political economy of the too big to fail doctrine," Working Papers (Old Series) 9017, Federal Reserve Bank of Cleveland.
    3. Paul W. Bauer & Gary D. Ferrier, 1996. "Scale economies, cost efficiencies, and technological change in Federal Reserve payments processing," Proceedings, Board of Governors of the Federal Reserve System (U.S.), pages 1004-1044.
    4. R. Preston McAfee, 1999. "The effects of vertical integration on competing input suppliers," Economic Review, Federal Reserve Bank of Cleveland, issue Q I, pages 2-8.
    5. Auerbach, Robert, 1982. "Changes in the provision of correspondent- banking services and the role of federal reserve banks under the DIDMC Act : A comment on Kane," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 16(1), pages 127-136, January.
    6. Flannery, Mark J., 1983. "Correspondent services and cost economies in commercial banking," Journal of Banking & Finance, Elsevier, vol. 7(1), pages 83-99, March.
    7. James B. Thomson, 1987. "Interbank exposure in the Fourth Federal Reserve District," Economic Commentary, Federal Reserve Bank of Cleveland, issue Aug.
    8. Lawrence, Robert J & Lougee, Duane, 1970. "Determinants of Correspondent Banking Relationships," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 2(3), pages 358-369, August.
    9. Kane, Edward J., 1982. "Changes in the provision of correspondent-banking services and the role of Federal Reserve Banks under the DIDMC Act," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 16(1), pages 93-126, January.
    10. Gilbert, R Alton, 1983. "Economies of Scale in Correspondent Banking," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 15(4), pages 483-488, November.
    11. George Baker & Robert Gibbons & Kevin J. Murphy, 1997. "Implicit Contracts and the Theory of the Firm," NBER Working Papers 6177, National Bureau of Economic Research, Inc.
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    Citations

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    Cited by:

    1. Juan Felipe Espinosa-Cristia & José Ignacio Alarcón & Bernardo Batiz-Lazo, 2022. "Local Adaptation of Work Practices: The Case of BancoEstado’s “CajaVecina†Correspondent Banking System," SAGE Open, , vol. 12(2), pages 21582440221, April.
    2. Ben R. Craig & James B. Thomson, 2001. "Federal Home Loan Bank lending to community banks: are targeted subsidies necessary?," Working Papers (Old Series) 0112, Federal Reserve Bank of Cleveland.
    3. Brickley, James A. & Linck, James S. & Smith, Clifford W., 2012. "Vertical integration to avoid contracting with potential competitors: Evidence from bankers' banks," Journal of Financial Economics, Elsevier, vol. 105(1), pages 113-130.
    4. McAndrews, James J. & Strahan, Philip E., 2002. "Deregulation, Correspondent Banking, and the Role of the Federal Reserve," Journal of Financial Intermediation, Elsevier, vol. 11(3), pages 320-343, July.
    5. Hanes, Christopher, 2019. "Explaining the appearance of open-mouth operations in the 1990s U.S," The North American Journal of Economics and Finance, Elsevier, vol. 48(C), pages 682-701.
    6. Richard J. Sullivan, 2012. "The Federal Reserve’s reduced role in retail payments: implications for efficiency and risk," Economic Review, Federal Reserve Bank of Kansas City, vol. 97(Q III).
    7. Ben Craig & James Thomson, 2003. "Federal Home Loan Bank Lending to Community Banks: Are Targeted Subsidies Desirable?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 23(1), pages 5-28, February.

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