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Should Banking Be Kept Separate from Commerce

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  • Alexander Raskovich

    (Economic Analysis Group, Antitrust Division, U.S. Department of Justice)

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    Abstract

    In the U.S., unlike much of the rest of the world, the mixing of banking and commerce is largely prohibited. One exception is industrial loan companies (ILCs), state chartered depository institutions some of which are owned by commercial parents. In 2006, the FDIC put a moratorium on the chartering of new ILCs pending resolution of a controversy sparked by Wal-Mart's application to start up an ILC in Utah. Wal-Mart subsequently withdrew its bid. This paper reviews the major arguments that have been raised against the mixing of banking and commerce, finding most to be theoretically weak or lacking in empirical support, and discusses several efficiencies that may arise from the integration of banking and commerce.

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    File URL: http://www.justice.gov/atr/public/eag/236665.pdf
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    Bibliographic Info

    Paper provided by Department of Justice, Antitrust Division in its series EAG Competition Advocacy Papers with number 200809.

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    Length: 28 pages
    Date of creation: Aug 2008
    Date of revision:
    Handle: RePEc:doj:compad:200809

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    Postal: Department of Justice Antitrust Division 450 Fifth Street NW Washington, DC 20530
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    Web page: http://www.justice.gov/atr/
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    16. Li Hao & Debarshi K. Nandy and & Gordon S. Roberts, 2007. "How bank regulation, supervision, and lender identity impact loan pricing: a cross-country comparison - summary," Proceedings 1068, Federal Reserve Bank of Chicago.
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    Cited by:
    1. Ken Heyer & Carl Shapiro & Jeffrey Wilder, 2009. "The Year in Review: Economics at the Antitrust Division, 2008–2009," Review of Industrial Organization, Springer, vol. 35(4), pages 349-367, December.

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