Stability of Distribution of Relative Sizes of Banks as an Argument for the Use of the Representative Agent Concept

We propose a new theoretical model of the large-scale banking system of an open economy. It is shown that distribution of relative sizes of individual banks is stable over time and does not depend on the volume of deposits. Our findings provide an additional argument in favor of use of the representative agent concept in banking sector modeling. Empirical testing shows that using generalized versions of Pareto and Normal distribution, distributions of relative sizes can be approximated with high accuracy and, moreover, distributions are stable over time. Moreover, banks move wothin this distribution, thus distribution of the general population of banks is stable over time