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Efficient banking under interstate branching

Joseph Hughes (), William W. Lang, Loretta Mester and Choon-Geol Moon

No 96-9, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: Nationally chartered banks will be allowed to branch across state lines beginning June 1, 1997. Whether they will depends on their assessment of the profitability of such a delivery system for their services and on their preferences regarding risk and return. The authors investigate the probable effect of interstate branching on banks' risk-return tradeoff, accounting for the endogeneity of deposit volatility. If interstate branching improves the risk-return tradeoff banks face, banks that branch across state lines may choose a higher level of risk in return for higher profits. The authors find distinct efficiency gains due to geographic diversity.

Keywords: Branch banks; Interstate banking (search for similar items in EconPapers)
Date: 1996
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Related works:
Working Paper: Efficient Banking Under Interstate Branching (1997)
Journal Article: Efficient banking under interstate branching (1996)
Journal Article: Efficient Banking under Interstate Branching (1996) Downloads
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