Rising Bank Concentration / Dean Corbae, Pablo D'Erasmo.

Format:

Book

Author/Creator:

Corbae, Dean.

Contributor:

National Bureau of Economic Research.

D'Erasmo, Pablo.

Series:

Working Paper Series (National Bureau of Economic Research) no. w26838.

NBER working paper series no. w26838

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2020.

Summary:

Concentration of insured deposit funding among the top four commercial banks in the U.S. has risen from 15% in 1984 to 44% in 2018, a roughly three-fold increase. Regulation has often been attributed as a factor in that increase. The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 removed many of the restrictions on opening bank branches across state lines. We interpret the Riegle-Neal act as lowering the cost of expanding a bank's funding base. In this paper, we build an industry equilibrium model in which banks endogenously climb a funding base ladder. Rising concentration occurs along a transition path between two steady states after branching costs decline.

Notes:

Print version record

March 2020.