Evolutionary model of the bank size distribution
AbstractAn evolutionary model of the bank size distribution is presented based on the exchange and creation of deposit money. In agreement with empirical results the derived size distribution is lognormal with a power law tail. The theory is based on the idea that the size distribution is the result of the competition between banks for permanent deposit money. The exchange of deposits causes a preferential growth of banks with a fitness that is determined by the competitive advantage to attract permanent deposits. While growth rate fluctuations are responsible for the lognormal part of the size distribution, treating the mean growth rate of banks as small, large banks benefit from economies of scale generating the Pareto tail. --
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Kiel Institute for the World Economy in its journal Economics: The Open-Access, Open-Assessment E-Journal.
Volume (Year): 8 (2014)
Issue (Month): 10 ()
Evolutionary economics; bank size; money; competition; Gibrat’; s law;
Other versions of this item:
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Institutional; Evolutionary
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Allen N. Berger & Rebecca S. Demsetz & Philip E. Strahan, 1998.
"The consolidation of the financial services industry: causes, consequences, and implications for the future,"
Finance and Economics Discussion Series
1998-46, Board of Governors of the Federal Reserve System (U.S.).
- Berger, Allen N. & Demsetz, Rebecca S. & Strahan, Philip E., 1999. "The consolidation of the financial services industry: Causes, consequences, and implications for the future," Journal of Banking & Finance, Elsevier, vol. 23(2-4), pages 135-194, February.
- J. O. S. Wilson & J. M. Williams, 2000. "The size and growth of banks: evidence from four European countries," Applied Economics, Taylor & Francis Journals, vol. 32(9), pages 1101-1109.
- Rhoades, Stephen A & Yeats, Alexander J, 1974. "Growth, Consolidation and Mergers in Banking," Journal of Finance, American Finance Association, vol. 29(5), pages 1397-1405, December.
- Berger, Allen N. & Hunter, William C. & Timme, Stephen G., 1993. "The efficiency of financial institutions: A review and preview of research past, present and future," Journal of Banking & Finance, Elsevier, vol. 17(2-3), pages 221-249, April.
- Kaldasch, Joachim, 2012.
"Evolutionary model of the growth and size of firms,"
Physica A: Statistical Mechanics and its Applications,
Elsevier, vol. 391(14), pages 3751-3769.
- Joachim Kaldasch, 2012. "Evolutionary Model of the Growth and Size of Firms," Papers 1208.1123, arXiv.org.
- Goddard, John A. & McKillop, Donal G. & Wilson, John O. S., 2002. "The growth of US credit unions," Journal of Banking & Finance, Elsevier, vol. 26(12), pages 2327-2356.
- Goddard, John & Molyneux, Phil & Wilson, John O S, 2004. "Dynamics of Growth and Profitability in Banking," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(6), pages 1069-90, December.
- Huberto M. Ennis, 2001. "On the size distribution of banks," Economic Quarterly, Federal Reserve Bank of Richmond, issue Fall, pages 1-25.
- Tschoegl, Adrian E, 1983. "Size, Growth, and Transnationality among the World's Largest Banks," The Journal of Business, University of Chicago Press, vol. 56(2), pages 187-201, April.
- Yeats, Alexander J & Irons, Edward D & Rhoades, Stephen A, 1975. "An Analysis of New Bank Growth," The Journal of Business, University of Chicago Press, vol. 48(2), pages 199-203, April.
- Peter Richmond & Sorin Solomon, 2000. "Power Laws are Boltzmann Laws in Disguise," Papers cond-mat/0010222, arXiv.org.
- Jean-Philippe Bouchaud & Marc Mezard, 2000. "Wealth condensation in a simple model of economy," Science & Finance (CFM) working paper archive 500026, Science & Finance, Capital Fund Management.
- Bouchaud, Jean-Philippe & Mézard, Marc, 2000. "Wealth condensation in a simple model of economy," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 282(3), pages 536-545.
- Xavier Gabaix, 2009.
"Power Laws in Economics and Finance,"
Annual Review of Economics,
Annual Reviews, vol. 1(1), pages 255-294, 05.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).
If references are entirely missing, you can add them using this form.