IDEAS home Printed from https://ideas.repec.org/a/fip/fedmqr/y1991isprp3-15nv.15no.2.html
   My bibliography  Save this article

Investigating the banking consolidation trend

Author

Listed:
  • 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, issue Spr, pages 3-15.
    • Handle: RePEc:fip:fedmqr:y:1991:i:spr:p:3-15:n:v.15no.2
    as

    Download full text from publisher

    File URL: http://minneapolisfed.org/research/qr/qr1521.html
    Download Restriction: no
    File URL: http://minneapolisfed.org/research/qr/qr1521.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Alien, Linda & Cebenoyan, A. Sinan, 1991. "Bank acquisitions and ownership structure: Theory and evidence," Journal of Banking & Finance, Elsevier, vol. 15(2), pages 425-448, April.
    2. Berger, Allen N. & Humphrey, David B., 1991. "The dominance of inefficiencies over scale and product mix economies in banking," Journal of Monetary Economics, Elsevier, vol. 28(1), pages 117-148, August.
    3. 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.).
    4. David B. Humphrey, 1990. "Why do estimates of bank scale economies differ?," Economic Review, Federal Reserve Bank of Richmond, issue Sep, pages 38-50.
    5. 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, issue Sep, pages 16-33.
    6. Brown, Charles & Medoff, James, 1989. "The Employer Size-Wage Effect," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1027-1059, October.
    7. Steven A. Sharpe, 1990. "Switching costs, market concentration, and prices: the theory and its empirical implications in the bank deposit market," Finance and Economics Discussion Series 138, Board of Governors of the Federal Reserve System (U.S.).
    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. Ben R. Craig & João Cabral dos Santos, 1996. "Performance and asset management effects of bank acquisitions," Working Paper 9619, Federal Reserve Bank of Cleveland.
    2. Chakraborty, Suparna & Allen, Linda, 2007. "Revisiting the Level Playing Field: International Lending Responses to Divergences in Japanese Bank Capital Regulations from the Basel Accord," MPRA Paper 1805, University Library of Munich, Germany.
    3. Bordo, Michael, 1995. "Regulation and bank stability: Canada and the United States, 1870-1980," Policy Research Working Paper Series 1532, The World Bank.
    4. John H. Boyd & Mark Gertler, 1993. "U.S. Commercial Banking: Trends, Cycles, and Policy," NBER Chapters,in: NBER Macroeconomics Annual 1993, Volume 8, pages 319-377 National Bureau of Economic Research, Inc.
    5. Gorton, Gary & Rosen, Richard, 1995. " Corporate Control, Portfolio Choice, and the Decline of Banking," Journal of Finance, American Finance Association, vol. 50(5), pages 1377-1420, December.
    6. Thorsten Beck, 2007. "Bank Concentration and Fragility. Impact and Mechanics," NBER Chapters,in: The Risks of Financial Institutions, pages 193-234 National Bureau of Economic Research, Inc.
    7. Joe Peek & Eric S. Rosengren, 1995. "Small business credit availability: how important is size of lender?," Working Papers 95-5, Federal Reserve Bank of Boston.
    8. Wheelock, David C. & Wilson, Paul W., 2001. "New evidence on returns to scale and product mix among U.S. commercial banks," Journal of Monetary Economics, Elsevier, vol. 47(3), pages 653-674, June.
    9. Elijah Brewer & William E. Jackson & Julapa Jagtiani, 2000. "Impact of independent directors and the regulatory environment on bank merger prices: evidence from takeover activity in the 1990s," Working Paper Series WP-00-31, Federal Reserve Bank of Chicago.
    10. Ben Craig & João Cabral dos Santos, 1997. "The risk effects of bank acquisitions," Economic Review, Federal Reserve Bank of Cleveland, issue Q II, pages 25-35.
    11. Hakenes, Hendrik & Schnabel, Isabel, 2010. "Banks without parachutes: Competitive effects of government bail-out policies," Journal of Financial Stability, Elsevier, vol. 6(3), pages 156-168, September.
    12. Santiago Carbó Valverde & Francisco Rodríguez Fernández, 2005. "Operaciones fuera de balance y economías de escala en el sector bancario español," Investigaciones Economicas, Fundación SEPI, vol. 29(2), pages 389-430, May.
    13. Martin Cihak & Simon Wolfe & Klaus Schaeck, 2006. "Are More Competitive Banking Systems More Stable?," IMF Working Papers 06/143, International Monetary Fund.
    14. Subal Kumbhakar & Efthymios Tsionas, 2008. "Scale and efficiency measurement using a semiparametric stochastic frontier model: evidence from the U.S. commercial banks," Empirical Economics, Springer, vol. 34(3), pages 585-602, June.
    15. Demirguc-Kunt, Asli & Laeven, Luc & Levine, Ross, 2004. "Regulations, Market Structure, Institutions, and the Cost of Financial Intermediation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(3), pages 593-622, June.
    16. Robert DeYoung & Karin P. Roland, 1999. "Product mix and earnings volatility at commercial banks: evidence from a degree of leverage model," Working Paper Series WP-99-6, Federal Reserve Bank of Chicago.
    17. Robert DeYoung & Anne Gron & Andrew Winton, 2005. "Risk overhang and loan portfolio decisions," Working Paper Series WP-05-04, Federal Reserve Bank of Chicago.
    18. Demid Golikov, 2005. "Financial Intermediary In Monetary Economics: An Excerpt," Macroeconomics 0510018, EconWPA.
    19. Hakenes, Hendrik & Schnabel, Isabel, 2010. "Banks without parachutes: Competitive effects of government bail-out policies," Journal of Financial Stability, Elsevier, vol. 6(3), pages 156-168, September.
    20. John H. Boyd & Stanley L. Graham, 1996. "Consolidation in U.S. banking: implications for efficiency and risk," Working Papers 572, Federal Reserve Bank of Minneapolis.
    21. Phong T. H. Ngo, 2006. "Endogenous Capital and Profitability in Banking," ANU Working Papers in Economics and Econometrics 2006-464, Australian National University, College of Business and Economics, School of Economics.
    22. 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.
    23. Michael D. Bordo & Hugh Rockoff & Angela Redish, 1993. "A Comparison of the United States and Canadian Banking Systems in the Twentieth Century: Stability vs. Efficiency?," NBER Working Papers 4546, National Bureau of Economic Research, Inc.
    24. Thorsten Beck & Asli Demirguc-Kunt & Ross Levine, 2003. "Bank Concentration and Crises," NBER Working Papers 9921, National Bureau of Economic Research, Inc.
    25. Andrew Winton, 1999. "Don’t Put All Your Eggs in One Basket? Diversification and Specialization in Lending," Center for Financial Institutions Working Papers 00-16, Wharton School Center for Financial Institutions, University of Pennsylvania.

    More about this item

    Keywords

    Bank mergers;

    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:fip:fedmqr:y:1991:i:spr:p:3-15:n:v.15no.2. 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: (Jannelle Ruswick). General contact details of provider: http://edirc.repec.org/data/frbmnus.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.