Effects of Competition from Large, Multimarket Firms on the Performance of Small, Single-Market Firms: Evidence from the Banking Industry

摘要

Over the last two decades, retail banking in the U.S. has changed dramatically. Large banks that branch across multiple local markets have significantly increased their share of local markets, and small banks that operate in a single market have experienced substantially reduced local market shares. As of 1982, large, multimarket banks, banks with gross total assets (GTA) over $1 billion (real 1994 dollars) with branch offices in more than one local market held 23.0% of local deposits in U.S. metropolitan markets. By 2000, this had nearly tripled to 64.8%. uring this same interval, shares in these markets of small, single-market banks (GTA 1 billion, offices in only one market) fell by more than two-thirds from 59.6% to 18.6%. The immediate enabling factor underlying this consolidation was geographical deregulation the removal over time of individual state restrictions on intrastate and interstate banking, followed by the Riegle-Neal Act of 1994, which permits almost unlimited nationwide branching.