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What's Special About Banks?


  • George J. Benston


I delineate six aspects of how banks have been "special" (although not unique) and then consider whether and to what extent these attributes are still relevant. These include efficiently produced products, importance for the development and growth of economies, international scope, role in economic instability and the conduct of monetary policy, early regulation by governments, and source of data for academic researchers and institutions. Despite changes in the environment and in the ways in which financial services are provided, banks still are special. However, their specialness for public policy concerns is now limited to frauds and deposit insurance. I suggest ways in which these concerns can be dealt with efficiently. Copyright 2004 by the Eastern Finance Association.

Suggested Citation

  • George J. Benston, 2004. "What's Special About Banks?," The Financial Review, Eastern Finance Association, vol. 39(1), pages 13-33, February.
  • Handle: RePEc:bla:finrev:v:39:y:2004:i:1:p:13-33

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    References listed on IDEAS

    1. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters,in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492 National Bureau of Economic Research, Inc.
    2. Gilley, Otis W. & Leone, Robert P., 1991. "A two-stage imputation procedure for item nonresponse in surveys," Journal of Business Research, Elsevier, vol. 22(4), pages 281-291, June.
    3. Boldin, Robert J. & Leggett, Keith & Strand, Robert, 1998. "Credit union industry structure: an examination of potential risks," Financial Services Review, Elsevier, vol. 7(3), pages 207-215.
    4. Karels, Gordon V. & McClatchey, Christine A., 1999. "Deposit insurance and risk-taking behavior in the credit union industry," Journal of Banking & Finance, Elsevier, vol. 23(1), pages 105-134, January.
    5. Fried, Harold O. & Knox Lovell, C. A. & Eeckaut, Philippe Vanden, 1993. "Evaluating the performance of US credit unions," Journal of Banking & Finance, Elsevier, vol. 17(2-3), pages 251-265, April.
    6. Aruna Srinivasan & B. Frank King, 1998. "Credit union issues," Economic Review, Federal Reserve Bank of Atlanta, issue Q 3, pages 32-41.
    7. Keith Leggett & Yvonne Stewart, 1999. "Multiple common bond credit unions and the allocation of benefits," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 23(3), pages 235-245, September.
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    Cited by:

    1. Wall, Larry D. & Eisenbeis, Robert A. & Frame, W. Scott, 2005. "Resolving large financial intermediaries: Banks versus housing enterprises," Journal of Financial Stability, Elsevier, vol. 1(3), pages 386-425, April.
    2. Yin, Haiyan & Yang, Jiawen & Mehran, Jamshid, 2013. "An empirical study of bank efficiency in China after WTO accession," Global Finance Journal, Elsevier, vol. 24(2), pages 153-170.
    3. Emilia Klepczarek, 2016. "Disclosure of risk information in the European banking sector," International Economics, University of Lodz, Faculty of Economics and Sociology, issue 16, pages 350-366, December.

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