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The competitive implications of multimarket bank branching

Timothy Hannan and Robin A. Prager

No 2001-43, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: Regulators and research economists typically view retail banking markets as locally limited, spanning an area that can often be approximated by a metropolitan area or a rural county. Banks are assumed to set retail prices based on the conditions of supply and demand prevailing within these local market areas. However, recent studies have found evidence that large, multimarket banking organizations tend to offer uniform interest rates for retail deposit accounts of a particular type throughout the area that they serve, at least within a given state. This uniform pricing phenomenon raises questions about the continued relevance of the concept of local banking markets for both research and antitrust purposes. We address this issue by developing and empirically testing a model to determine the effects of the presence of multimarket banks in a local geographic market on the deposit interest rates offered by single-market banks serving that same local market.

Keywords: Banks and banking; Econometric models; Prices (search for similar items in EconPapers)
Date: 2001
New Economics Papers: this item is included in nep-pke
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Citations: View citations in EconPapers (8)

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Journal Article: The competitive implications of multimarket bank branching (2004) Downloads
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