The Influence of Consolidation and Concentration of the Banking Sector on the Price Level in the Banks. The Example of USA
Consolidation leads to the higher concentration of the banking sector. Developments of ICT and electronic banking, on the one hand enable to create extended banking organizations, but on the other hand expand boundaries of the local banking market and the range of banking products. This research, which was conducted on the group of top 50 US banks for the period of 1994–2005, shows that there is a positive, although weak, correlation between the banking market concentration and the price level. Moreover, the research indicates the level of non-interest costs, as an important determinant of the increase of lending interest rates. Factors responsible for the reduction of lending rates are: the value of banking assets, the value of non-interest earnings, and the level of development of local real and financial sectors. The general outcome of the research suggests that the analysis of market effects of the bank merger should not be focused only on the relationship between the banking market concentration and the level of prices, but on the feasibility of improvements in the cost and revenue structures, resulted from expansion of the bank's network and the range of services. Consolidation may lead to reduction of overhead costs and banking prices. However, too broad expansion, may be a source of unexpected costs and force banks to raise lending rates and service charges, limit their competitiveness and put threat on the stability of the future operations.
Volume (Year): 21 (2008)
Issue (Month): ()
|Contact details of provider:|| Postal: ul. Dluga 44/50, 00-241 Warszawa|
Phone: +48 +22 5549184
Fax: (+48 22) 831 28 46
Web page: http://www.wne.uw.edu.pl
More information through EDIRC
|Order Information:|| Web: http://ekonomia.wne.uw.edu.pl Email: |
When requesting a correction, please mention this item's handle: RePEc:eko:ekoeko:21_120. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marta Höffner)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.