EconPapers    
Economics at your fingertips  
 

The Influence of Consolidation and Concentration of the Banking Sector on the Price Level in the Banks. The Example of USA

Sylwester Kozak

Ekonomia journal, 2008, vol. 21

Abstract: Consolidation leads to the higher concentration of the banking sector. Developments of ICT and electronic banking, on the one hand enable to create extended banking organizations, but on the other hand expand boundaries of the local banking market and the range of banking products. This research, which was conducted on the group of top 50 US banks for the period of 1994–2005, shows that there is a positive, although weak, correlation between the banking market concentration and the price level. Moreover, the research indicates the level of non-interest costs, as an important determinant of the increase of lending interest rates. Factors responsible for the reduction of lending rates are: the value of banking assets, the value of non-interest earnings, and the level of development of local real and financial sectors. The general outcome of the research suggests that the analysis of market effects of the bank merger should not be focused only on the relationship between the banking market concentration and the level of prices, but on the feasibility of improvements in the cost and revenue structures, resulted from expansion of the bank's network and the range of services. Consolidation may lead to reduction of overhead costs and banking prices. However, too broad expansion, may be a source of unexpected costs and force banks to raise lending rates and service charges, limit their competitiveness and put threat on the stability of the future operations.

Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://ekonomia.wne.uw.edu.pl/ekonomia/getFile/672 (application/pdf)
no

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eko:ekoeko:21_120

Ordering information: This journal article can be ordered from
http://ekonomia.wne.uw.edu.pl

Access Statistics for this article

Ekonomia journal is currently edited by Tomasz Żylicz

More articles in Ekonomia journal from Faculty of Economic Sciences, University of Warsaw Contact information at EDIRC.
Bibliographic data for series maintained by Marta Höffner ().

 
Page updated 2021-01-15
Handle: RePEc:eko:ekoeko:21_120