When for-profits and not-for-profits compete: theory and empirical evidence from retail banking
AbstractWe model competition in local deposit markets between for-profit and not-for-profit financial institutions. For-profit retail banks may offer a superior bundle of financial services, but not-for-profit (occupational) credit unions enjoy sponsor subsidies that allow them to capture a share of the local market. The model predicts that greater participation in credit unions in a given county will be associated with higher levels of retail-bank concentration. We find empirical evidence of this association. The ability of credit unions to affect local banking market structure supports the presumption of current banking antitrust analysis that retail banking markets remain local. We identify local economic factors that modulate the nature of competition between banks and credit unions, including income per capita and population density.
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 InfoPaper provided by Federal Reserve Bank of St. Louis in its series Supervisory Policy Analysis Working Papers with number 2004-01.
Date of creation: 2004
Date of revision:
Other versions of this item:
- William R. Emmons & Frank A. Schmid, 2004. "When for-profits and not-for-profits compete: theory and empirical evidence from retail banking," Working Papers 2004-004, Federal Reserve Bank of St. Louis.
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.:
- Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
- Oliver Hart & John Moore, 1998.
"Cooperatives vs. Outside Ownership,"
NBER Working Papers
6421, National Bureau of Economic Research, Inc.
- Oliver Hart & John Moore, 1998. "Cooperatives vs. Outside Ownership," STICERD - Theoretical Economics Paper Series 346, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Oliver Hart & John Moore, 1998. "Cooperatives vs. Outside Ownership," Harvard Institute of Economic Research Working Papers 1816, Harvard - Institute of Economic Research.
- Oliver Hart & John Moore, 2004. "Cooperatives vs. Outside Ownership," ESE Discussion Papers 114, Edinburgh School of Economics, University of Edinburgh.
- Prager, Robin A & Hannan, Timothy H, 1998. "Do Substantial Horizontal Mergers Generate Significant Price Effects? Evidence from the Banking Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 46(4), pages 433-52, December.
- Myron L. Kwast & Martha Starr-McCluer & John D. Wolken, 1997. "Market definition and the analysis of antitrust in banking," Finance and Economics Discussion Series 1997-52, Board of Governors of the Federal Reserve System (U.S.).
- Amel, Dean F. & Hannan, Timothy H., 1999. "Establishing banking market definitions through estimation of residual deposit supply equations," Journal of Banking & Finance, Elsevier, vol. 23(11), pages 1667-1690, November.
- Cleveland, William S. & Devlin, Susan J. & Grosse, Eric, 1988. "Regression by local fitting : Methods, properties, and computational algorithms," Journal of Econometrics, Elsevier, vol. 37(1), pages 87-114, January.
- William R. Emmons & Frank A. Schmid, 2000. "Bank competition and concentration: do credit unions matter?," Review, Federal Reserve Bank of St. Louis, issue May, pages 29-42.
- Timothy H. Hannan, 2003. "The impact of credit unions on the rates offered for retail deposits by banks and thrift institutions," Finance and Economics Discussion Series 2003-06, Board of Governors of the Federal Reserve System (U.S.).
- Andrews, Donald W. K., 1991. "Asymptotic optimality of generalized CL, cross-validation, and generalized cross-validation in regression with heteroskedastic errors," Journal of Econometrics, Elsevier, vol. 47(2-3), pages 359-377, February.
- Andew Cohen & Michael Mazzeo, 2004. "Market structure and competition among retail depository institutions," Finance and Economics Discussion Series 2004-04, Board of Governors of the Federal Reserve System (U.S.).
- 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.
- Gilbert, R Alton, 1984. "Bank Market Structure and Competition: A Survey," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 16(4), pages 617-44, November.
- Jolly, Robert W. & Koppenhaver, Gary D. & Roe, Joshua D., 2004. "Growth of Large-Scale Credit Unions in Iowa: Implications for Public Policy," Staff General Research Papers 12216, Iowa State University, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Xiao Xiaohong) The email address of this maintainer does not seem to be valid anymore. Please ask Xiao Xiaohong to update the entry or send us the correct address.
If references are entirely missing, you can add them using this form.