Nationwide branching and its impact on market structure, quality, and bank performance

By Astrid A. Dick. 2003

295 citations recorded by the source corpus.

Based on a sample for 1993-1999, this paper examines the effects of nationwide branching, following the Riegle-Neal Act, on various aspects of banking markets and bank service and performance. While concentration at the regional level has increased dramatically, deregulation has left almost intact the market structure of urban markets, which have between two to three dominant firms--controlling over half of a market's deposits--in 1999 just as they did in 1993. A significant portion of the observed increase in bank quality can be traced to the implementation of nationwide branching. By allowing banks to open branches in any state, the new regime has permitted consumers to enjoy greater networks, free of fees, throughout large geographic regions. Consistent with an increase in service quality, costs and service fees increase. Credit risk increases as greater geographic diversification might provide a hedge against greater risk-return choices. Coherent with these findings and an increase in lending competition and profit efficiency, spreads fall and profits are unaffected.

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Citations in the corpus

Competition in Banking: A Review of the Literature (2004, background): “s that Dick (2003) also finds that lifting the restrictions on branching led to a higher density of bra outlets and higher service costs.”
Market Size, Service Quality, and Competition in Banking (2007, unknown): “As mentioned earlier, Dick (2006) finds that the structure of markets remained almost intact throughout 1993–99 during the implementation of nationwide branching.”
Competition and regulation in the banking sector: A review of the empirical evidence on the sources of bank rents (2007, unknown): “A further illustration can be found in Dick (2006).”
Bank Concentration and Fragility. Impact and Mechanics (2005, background): “However, Jayaratne and Strahan (1998) find that deregulation in the 1980s lowered loan losses, and Dick (2006) finds higher loan loss provisions following deregulation in the 1990s. ences a systemic crisis.”
Demand Estimation and Consumer Welfare in the Banking Industry (2008, unknown): “While there was significant increase in concentration at the regional level and a sharp reduction in the number of banking institutions, the structure of local banking markets remained virtually the same throughout the period, as shown in Dick (2006).”
Personal Bankruptcy and Credit Market Competition (2010, background): “Dick (2006) nds that following banking deregulation in the 1990s, concentration showed little variation in local banking markets (measured a the the level of the metropolitan statistical area), while banking concentration actually increased at the regional level (where the region encloses several…”
The Relationship between Liquidity Risk and Credit Risk in Banks (2014, background): “Considering the numerator, it is the same as in Angbazo (1997) and closely related to Dick (2006) who uses loan write-offs for the calculation.”
Bank Concentration and Competition: An Evolution in the Making (2004, background): “These studies controlled for measures of X-efficiency and scale efficiency and allowed concentration and market share in local U.S. banking markets to be functions of these efficiency measures (e.g., Berger, 1995, Frame and Kamerschen, 1997).”
Bank Competition and Financial Stability : Friends or Foes? (2008, background): “In a seminal paper, Keeley (1990) provides evidence that increased competition following the relaxation of state branching restrictions in the 1980s reduced banks’ capital cushions and increased risk premiums reflected in higher interest rates on certificates of deposit.”