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Why does bank performance vary across states?

Author

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  • Michelle Clark Neely
  • David C. Wheelock

Abstract

Since 1980, commercial bank earnings have varied widely across states. The authors find that much of this variation can be attributed to difference in economic conditions, and they suggest that interstate branching should promote a more stable banking system by enabling greater geographic diversification of bank operations. Differences in state banking laws and the presence of money centers in certain states, however, have caused bank earnings to vary from state to state and will continue to do so.

Suggested Citation

  • Michelle Clark Neely & David C. Wheelock, 1997. "Why does bank performance vary across states?," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 27-40.
  • Handle: RePEc:fip:fedlrv:y:1997:i:mar:p:27-40
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    References listed on IDEAS

    as
    1. Joe Peek & Eric S. Rosengren, 1994. "Bank Real Estate Lending and the New England Capital Crunch," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 22(1), pages 33-58.
    2. Walker F. Todd, 1988. "Developing country lending and current banking conditions," Economic Review, Federal Reserve Bank of Cleveland, issue Q II, pages 27-36.
    3. Ausubel, Lawrence M, 1991. "The Failure of Competition in the Credit Card Market," American Economic Review, American Economic Association, vol. 81(1), pages 50-81, March.
    4. Kenneth Spong, 2000. "Banking regulation : its purposes, implementation, and effects," Monograph, Federal Reserve Bank of Kansas City, number 2000bria, Jan 10.
    5. Cletus C. Coughlin & Thomas B. Mandelbaum, 1988. "Why have state per capita incomes diverged recently?," Review, Federal Reserve Bank of St. Louis, issue Sep, pages 24-36.
    6. Peter S. Rose, 1995. "Diversification and interstate banking," Proceedings 461, Federal Reserve Bank of Chicago.
    7. Katherine A. Samolyk, 1994. "U.S. banking sector trends: assessing disparities in industry performance," Economic Review, Federal Reserve Bank of Cleveland, issue Q II, pages 2-17.
    8. R. Alton Gilbert, 1991. "Do bank holding companies act as "sources of strength" for their bank subsidiaries?," Review, Federal Reserve Bank of St. Louis, issue Jan, pages 3-18.
    9. Grammatikos, Theoharry & Saunders, Anthony, 1990. "Additions to bank loan-loss reserves : Good news or bad news?," Journal of Monetary Economics, Elsevier, vol. 25(2), pages 289-304, March.
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    Keywords

    Banks and banking ; Bank profits;

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