IDEAS home Printed from https://ideas.repec.org/a/eee/ecolet/v190y2020ics0165176520300926.html
   My bibliography  Save this article

U.S. banking concentration, 1820–2019

Author

Listed:
  • Fohlin, Caroline
  • Jaremski, Matthew

Abstract

Concentration plays a key role in banking efficiency and stability, yet the literature lacks any long-run analysis of U.S. banking industry structure. This paper uses newly-collected archival data to provide the first study of banking concentration from the early years of the republic through 2019. While concentration was declining or stable before the mid-1920s, statistical tests identify a structural break thereafter, as concentration started steadily rising as a result of growth at the nation’s largest five banks, particularly those located in New York City. A second structural break in the mid-1990s further accelerated the upward trend in concentration before slowing down during the Great Recession.

Suggested Citation

  • Fohlin, Caroline & Jaremski, Matthew, 2020. "U.S. banking concentration, 1820–2019," Economics Letters, Elsevier, vol. 190(C).
    • Handle: RePEc:eee:ecolet:v:190:y:2020:i:c:s0165176520300926
    DOI: 10.1016/j.econlet.2020.109104
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165176520300926
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econlet.2020.109104?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Philip E. Strahan, 2013. "Too Big to Fail: Causes, Consequences, and Policy Responses," Annual Review of Financial Economics, Annual Reviews, vol. 5(1), pages 43-61, November.
    2. Thorsten Beck, 2007. "Bank Concentration and Fragility. Impact and Mechanics," NBER Chapters, in: The Risks of Financial Institutions, pages 196-231, National Bureau of Economic Research, Inc.
    3. Kris James Mitchener & Gary Richardson, 2019. "Network Contagion and Interbank Amplification during the Great Depression," Journal of Political Economy, University of Chicago Press, vol. 127(2), pages 465-507.
    4. Hubert P. Janicki & Edward Simpson Prescott, 2006. "Changes in the size distribution of U.S. banks: 1960-2005," Economic Quarterly, Federal Reserve Bank of Richmond, vol. 92(Fall), pages 291-316.
    5. Clemente, Jesus & Montanes, Antonio & Reyes, Marcelo, 1998. "Testing for a unit root in variables with a double change in the mean," Economics Letters, Elsevier, vol. 59(2), pages 175-182, May.
    6. Ricardo T. Fernholz & Christoffer Koch, 2017. "Bank Asset Concentration Not Necessarily Cause for Worry," Economic Letter, Federal Reserve Bank of Dallas, vol. 12(7), pages 1-4, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bitros, George C., 2021. "Destabilizing asymmetries in central banking: With some enlightenment from money in classical Athens," The Journal of Economic Asymmetries, Elsevier, vol. 23(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bougheas, Spiros & Harvey, David I. & Kirman, Alan & Nelson, Douglas, 2024. "Systemic risk in banking, fire sales, and macroeconomic disasters," Journal of Economic Dynamics and Control, Elsevier, vol. 168(C).
    2. Jaremski, Matthew, 2018. "The (dis)advantages of clearinghouses before the Fed," Journal of Financial Economics, Elsevier, vol. 127(3), pages 435-458.
    3. Kutuk, Yasin, 2022. "Inequality convergence: A world-systems theory approach," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 150-165.
    4. Nasreen, Samia & Anwar, Sofia & Ozturk, Ilhan, 2017. "Financial stability, energy consumption and environmental quality: Evidence from South Asian economies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 67(C), pages 1105-1122.
    5. Garrod Brian & Almeida António & Machado Luiz, 2023. "Modelling of nonlinear asymmetric effects of changes in tourism on economic growth in an autonomous small-island economy," European Journal of Tourism, Hospitality and Recreation, Sciendo, vol. 13(2), pages 154-172, December.
    6. Hartwell, Christopher A., 2014. "The impact of institutional volatility on financial volatility in transition economies : a GARCH family approach," BOFIT Discussion Papers 6/2014, Bank of Finland, Institute for Economies in Transition.
    7. Sinha, Avik & Shahbaz, Muhammad, 2018. "Estimation of Environmental Kuznets Curve for CO2 emission: Role of renewable energy generation in India," Renewable Energy, Elsevier, vol. 119(C), pages 703-711.
    8. Francis Ahking, 2003. "Efficient unit root tests of real exchange rates in the post-Bretton Woods era," Economics Bulletin, AccessEcon, vol. 6(7), pages 1-12.
    9. repec:zbw:bofitp:urn:nbn:fi:bof-201505061169 is not listed on IDEAS
    10. J. M. Belbute & A. B. Caleiro, 2013. "Cross Country Evidence on Consumption Persistence," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 3(2), pages 440-440.
    11. Laura Panza, 2012. "Globalisation and the Ottoman Empire: A study of integration between Ottoman and world cotton markets," Working Papers 2012.01, School of Economics, La Trobe University.
    12. Shahbaz, Muhammad, 2013. "Linkages between inflation, economic growth and terrorism in Pakistan," Economic Modelling, Elsevier, vol. 32(C), pages 496-506.
    13. Alvaro Pereira & João Jalles & Martin Andresen, 2012. "Structural change and foreign direct investment: globalization and regional economic integration," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 11(1), pages 35-82, April.
    14. Mesbah Fathy SHARAF, 2017. "Energy consumption and economic growth in Egypt: A disaggregated causality analysis with structural breaks," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 46, pages 59-76.
    15. Vighneswara Swamy, 2017. "Determinants of Bank Asset Quality and Profitability: An Empirical Assessment," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot GmbH, Berlin, vol. 63(1), pages 97-135.
    16. Jean-Pierre Allegret & Cécile Couharde & Cyriac Guillaumin, 2012. "The Impact of External Shocks in East Asia: Lessons from a Structural VAR Model with Block Exogeneity," International Economics, CEPII research center, issue 132, pages 35-89.
    17. Bruno Thiago Tomio & Guillaume Vallet, 2021. "Carry Trade and Negative Policy Rates in Switzerland : Low-lying fog or storm ?," Post-Print halshs-03669561, HAL.
    18. Iorember, Paul Terhemba & Usman, Ojonugwa & Jelilov, Gylych, 2019. "Asymmetric Effects of Renewable Energy Consumption, Trade Openness and Economic Growth on Environmental Quality in Nigeria and South Africa," MPRA Paper 96333, University Library of Munich, Germany, revised 2019.
    19. Shayanewako Varaidzo Batsirai & Asrat Tsegaye & Yohane Khamfula, 2019. "The Nexus between Macro-Prudential Banking Regulation, Interest Rate Spread and Monetary Policy in South Africa," Journal of Economics and Behavioral Studies, AMH International, vol. 10(6), pages 141-151.
    20. Johannes W. Fedderke, 2022. "Identifying steady‐state growth and inflation in the South African economy, 1960–2020," South African Journal of Economics, Economic Society of South Africa, vol. 90(3), pages 279-300, September.
    21. Aynur Pala, 2013. "Structural Breaks, Cointegration, and Causality by VECM Analysis of Crude Oil and Food Price," International Journal of Energy Economics and Policy, Econjournals, vol. 3(3), pages 238-246.

    More about this item

    Keywords

    Bank concentration; Too big to fail;

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • N11 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: Pre-1913

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolet:v:190:y:2020:i:c:s0165176520300926. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolet .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.