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Banking in transition


  • George E. French

    (The Jerome Levy Economics Institute)


The bank as "general store" is slowly being replaced by the bank as conglomerate. This is because improvements in information technology and market efficiency are changing the way the activities of financial intermediaries are performed. The imperatives of cost minimization and competition have dictated that activities that were once performed together in one physical place by a few people are now performed separately by specialists. It is natural in this environment for entrepreneurs to form conglomerates of these various business units in order to fulfill the role once played by the bank as general store. The question is just how many will be absorbed as branches or affiliates of large organizations. George French's work addresses two questions: What are the reasons for banks' declining market share, and are further declines inevitable?

Suggested Citation

  • George E. French, 1999. "Banking in transition," Macroeconomics 9906005, EconWPA.
  • Handle: RePEc:wpa:wuwpma:9906005
    Note: Type of Document - Acrobat PDF; prepared on IBM PC; to print on PostScript; pages: 43; figures: included

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    References listed on IDEAS

    1. Fama, Eugene F., 1986. "Term premiums and default premiums in money markets," Journal of Financial Economics, Elsevier, vol. 17(1), pages 175-196, September.
    2. Douglas W. Diamond & Philip H. Dybvig, 2000. "Bank runs, deposit insurance, and liquidity," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 14-23.
    3. Franklin R. Edwards, 1993. "Financial markets in transition; or, the decline of commercial banking," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 5-69.
    4. Kenneth M. Wright, 1991. "The structure, conduct, and regulation of the life insurance industry," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 35, pages 73-116.
    5. Edwards, F.R., 1993. "Financial Markets in Transition -- or the Decline of Commercial Banking," Papers 93-06, Columbia - Graduate School of Business.
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    JEL classification:

    • E - Macroeconomics and Monetary Economics

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