Size and Financial Performance in Banking

摘要

Recent changes in the economic, financial, and regulatory environment have raised concerns about the viability of small banks. For example, broadened deposit-taking and credit-granting powers for thrift institutions were provided for by the Depository Institutions Deregulation and Monetary Control Act of 1980 and the Garn-St. Germain Depository Institution Act of 1982. These acts also provided for the gradual elimination of deposit rate ceilings. Moreover, changing technology, especially the growth of electronic funds transfer systems, and the spread of nondepository institutions into financial services, continue to progress at a rapid pace. The combined effects of changes such as these have raised questions about the future of banks in general and small banks in particular. Unfortunately much discussion of current trends and of the general outlook for the financial services industry as a whole and small banks in particular is not firmly grounded on factual information about the financial condition and performance of these organizations. This study provides empirical evidence on the financial conditions of a large number of small, medium, and large banking organizations over the 1964-1982 period. Comprehensive empirical evidence of this kind for small banks, in addition to banks of larger size, is of importance in its own right.