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Investigating the banking consolidation trend

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  • John H. Boyd
  • Stanley L. Graham

Abstract

This paper examines whether the U.S. banking industry's recent consolidation trend--toward fewer and bigger firms--is a natural result of market forces. The paper finds that it is not: The evidence does not support the popular claims that large banking firms are more efficient and less risky than smaller firms or the notion that the industry is consolidating in order to eliminate excess capacity. The paper suggests, instead, that public policies are encouraging banks to merge, although it acknowledges that other forces may be at work as well.

Suggested Citation

  • John H. Boyd & Stanley L. Graham, 1991. "Investigating the banking consolidation trend," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 15(Spr), pages 3-15.
    • Handle: RePEc:fip:fedmqr:y:1991:i:spr:p:3-15:n:v.15no.2
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    References listed on IDEAS

    as
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    5. Kathleen A. Kuester & James M. O'Brien, 1991. "Market-based deposit insurance premiums: an evaluation," Finance and Economics Discussion Series 150, Board of Governors of the Federal Reserve System (U.S.).
    6. David B. Humphrey, 1990. "Why do estimates of bank scale economies differ?," Economic Review, Federal Reserve Bank of Richmond, vol. 76(Sep), pages 38-50.
    7. 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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