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Deregulation and Structural Change in the U.S. Commercial Banking Industry

Author

Listed:
  • Stephen M. Miller

    (Department of Economics, University of Nevada, Las Vegas)

  • Yongil Jeon

    (Central Michigan University)

Abstract

Regulatory change not seen since the Great Depression swept the U.S. banking industry beginning in the early 1980s and culminated with the Interstate Banking and Branching Efficiency Act of 1994. This paper describes and discusses the evolution of the U.S. banking industry over the past two decades, using the 1976 to 1998 Report of Condition and Income (Call Report) and merger data posted on the Federal Reserve Bank of Chicago web site. Among several results, more permissive interstate banking and branching regulation significantly associates with higher merger rates, with lower net entry rates, and with higher concentration within states.

Suggested Citation

  • Stephen M. Miller & Yongil Jeon, 2003. "Deregulation and Structural Change in the U.S. Commercial Banking Industry," Eastern Economic Journal, Eastern Economic Association, vol. 29(3), pages 391-414, Summer.
    • Handle: RePEc:eej:eeconj:v:29:y:2003:i:3:p:391-414
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    References listed on IDEAS

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    1. Allen N. Berger & Seth D. Bonime & Lawrence G. Goldberg & Lawrence J. White, 1999. "The Dymanics of Market Entry: The Effects of Mergers and Acquisitions on De Novo Entry and Small Business Lending in the Banking Industry," Working Papers 99-13, New York University, Leonard N. Stern School of Business, Department of Economics.
    2. Berger, Allen N. & Humphrey, David B., 1997. "Efficiency of financial institutions: International survey and directions for future research," European Journal of Operational Research, Elsevier, vol. 98(2), pages 175-212, April.
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    4. Yongil Jeon & Stephen M. Miller, 2002. "Bank Concentration and Performance," Working papers 2002-25, University of Connecticut, Department of Economics.
    5. Kaparakis, Emmanuel I & Miller, Stephen M & Noulas, Athanasios G, 1994. "Short-Run Cost Inefficiency of Commercial Banks: A Flexible Stochastic Frontier Approach," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 26(4), pages 875-893, November.
    6. Jalal D. Akhavein & Allen N. Berger & David B. Humphrey, "undated". "The Effects of Megamergers on Efficiency and Prices: Evidence from a Bank Profit Function," Finance and Economics Discussion Series 1997-09, Board of Governors of the Federal Reserve System (U.S.), revised 10 Dec 2019.
    7. Noulas, Athanasios G & Ray, Subhash C & Miller, Stephen M, 1990. "Returns to Scale and Input Substitution for Large U.S. Banks," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 22(1), pages 94-108, February.
    8. Randall S. Kroszner & Philip E. Strahan, 1999. "What Drives Deregulation? Economics and Politics of the Relaxation of Bank Branching Restrictions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(4), pages 1437-1467.
    9. repec:bla:scandj:v:88:y:1986:i:3:p:511-27 is not listed on IDEAS
    10. Kane, Edward J, 1996. "De Jure Interstate Banking: Why Only Now?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(2), pages 141-161, May.
    11. William R. Keeton, 2000. "Are mergers responsible for the surge in new bank charters?," Economic Review, Federal Reserve Bank of Kansas City, vol. 85(Q I), pages 21-41.
    12. Jeffrey A. Clark, 1988. "Economies of scale and scope at depository financial institutions: a review of the literature," Economic Review, Federal Reserve Bank of Kansas City, vol. 73(Sep), pages 16-33.
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    Citations

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    Cited by:

    1. Yonjil Jeon & Stephen M. Miller, 2005. "Bank Performance: Market Power or Efficient Structure?," Working papers 2005-23, University of Connecticut, Department of Economics.
    2. Kent Matthews & Xu Zhang & Jianguang Guo, 2009. "Nonperforming Loans and Productivity in Chinese Banks, 1997-2006," Chinese Economy, Taylor & Francis Journals, vol. 42(2), pages 30-47, March.
    3. Zou, YongDong & Miller, Stephen M. & Malamud, Bernard, 2011. "Geographic deregulation and commercial bank performance in U.S. state banking markets," The Quarterly Review of Economics and Finance, Elsevier, vol. 51(1), pages 28-35, February.
    4. Yongil Jeon & Stephen M. Miller, 2002. "Bank Concentration and Performance," Working papers 2002-25, University of Connecticut, Department of Economics.
    5. Maria Karadima & Helen Louri, 2019. "Non-performing loans in the euro area: does market power matter?," Working Papers 271, Bank of Greece.
    6. Ana Lozano-Vivas & Miguel A. Meléndez-Jiménez & Antonio J. Morales, 2016. "Branching Deregulation and Merger Optimality," Manchester School, University of Manchester, vol. 84(2), pages 270-295, March.
    7. Yongil Jeon & Stephen M. Miller, 2002. "Has Deregulation Affected Births, Deaths, and Marriages in the U.S. Commercial Banking Industry?," Working papers 2002-26, University of Connecticut, Department of Economics.
    8. Yongil Jeon & Stephen M. Miller, 2002. "An 'Ideal' Deconposition of Industry Dynamics: An Application to the Nationwide and State Level U.S. Banking Industry," Working papers 2002-23, University of Connecticut, Department of Economics.
    9. Yongil Jeon & Stephen M. Miller, 2002. "Explaining U.S. Commercial Bank Births, Deaths, and Marriages," Working papers 2002-27, University of Connecticut, Department of Economics.
    10. Yongil Jeon & Stephen M. Miller, 2007. "Births, Deaths, And Marriages In The U.S. Commercial Banking Industry," Economic Inquiry, Western Economic Association International, vol. 45(2), pages 325-341, April.

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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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