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Are Banks Really Dying This Time? - In Brief

September 1, 2007


Ron J. Feldman Vice President
Mark Lueck Economist
Are Banks Really Dying This Time? - In Brief
  • 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.

Are Banks Really Dying This Time? [complete article]