Where Are All the New Banks? The Role of Regulatory Burden in New Bank Formation

Robert M. Adams () and Jacob Gramlich ()
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Robert M. Adams: Federal Reserve Board
Jacob Gramlich: Federal Reserve Board

Review of Industrial Organization, 2016, vol. 48, issue 2, No 4, 208 pages

Abstract: Abstract New bank formation in the U.S. has declined dramatically since the financial crisis, from over 130 new banks per year to less than 1. Many have suggested that this is due to newly-instituted regulation, but the current weak economy and low interest rates (which both depress banking profits) could also have played a role. We estimate a model of bank entry decisions on data from 1976 to 2013 which indicates that at least 75 % of the decline in new bank formation would have occurred without any regulatory change. The standalone effect of regulation is more difficult to quantify.

Keywords: Bank competition; Bank entry; Regulation (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (6)

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DOI: 10.1007/s11151-015-9499-3

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