Banks’ market share by standard measures continues to decline, perhaps due to new competition. This decline may justify changes in government policy—which reflects a view that banks are special—such as reduction in support or regulation.
Similar concerns led to a 1994 study by economist John Boyd and Mark Gertler. After appropriate adjustments, they found banks’ market share held firm. This article replicates that study with current data and similar results.
Unfortunately, limited data on expanded activities of banks’ competitors makes implementing the Boyd-Gertler approach challenging today. Whether the benefits of acquiring necessary data justify the cost is an open question, but good policy requires a solid sense of banks’ market share.