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Regulation and the Public Interest in Banking

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  • Jehle, Geoffrey

Abstract

The rules that should govern competition and conduct in banking are currently the topics of spirited debate. This paper proposes a rigorous welfare-theoretic methodology which can provide a unifying focus for a wide range of regulatory and market structure issues in banking. The methodology is then applied in an empirical study of recent FDIC bank merger decisions. Evidence is found that potential welfare losses to borrowers and welfare gains to bank owners do influence the decisions taken, and that borrowers and bank owners receive roughly equal treatment by the regulator. The potential welfare losses to depositors, however, appear to be generally ignored.

Suggested Citation

  • Jehle, Geoffrey, 1985. "Regulation and the Public Interest in Banking," MPRA Paper 73414, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:73414
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    File URL: https://mpra.ub.uni-muenchen.de/73414/1/MPRA_paper_73414.pdf
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    References listed on IDEAS

    as
    1. Heggestad, Arnold A & Mingo, John J, 1977. "The Competitive Condition of U. S. Banking Markets and the Impact of Structural Reform," Journal of Finance, American Finance Association, vol. 32(3), pages 649-661, June.
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    4. Benston, George J, 1972. "Economies of Scale of Financial Institutions," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 4(2), pages 312-341, May.
    5. Paul A. Meyer, 1967. "Price Discrimination, Regional Loan Rates, And The Structure Of The Banking Industry," Journal of Finance, American Finance Association, vol. 22(1), pages 37-48, March.
    6. Daniel L. McFadden, 1976. "Quantal Choice Analysis: A Survey," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 363-390, National Bureau of Economic Research, Inc.
    7. Stephen A. Rhoades, 1977. "Structure-performance studies in banking: a summary and evaluation," Staff Studies 92, Board of Governors of the Federal Reserve System (U.S.).
    8. Heggestad, Arnold A & Mingo, John J, 1976. "Prices, Nonprices, and Concentration in Commercial Banking," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 8(1), pages 107-117, February.
    9. Jehle, Geoffrey, 1984. "Individual Welfare and the Demand for Financial Instruments," MPRA Paper 73410, University Library of Munich, Germany.
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    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • D6 - Microeconomics - - Welfare Economics
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • L5 - Industrial Organization - - Regulation and Industrial Policy

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