Local Bank Office Ownership, Deposit Control, Market Structure, and Economic Growth

USDA Economic Research Service Technical Bulletin No. 1886

33 Pages Posted: 9 Aug 2000

See all articles by Robert N. Collender

Robert N. Collender

Federal Housing Finance Agency

Sherrill Shaffer

University of Wyoming

Date Written: May 2000

Abstract

The restructuring of commercial banking has heightened interest in its economic consequences both for the economy as a whole and for those most likely to bear adverse consequences: small businesses, small banks, and rural areas. Most previous research on bank restructuring focuses on changes in bank behavior. In contrast, this paper focuses on the empirical association between local economic performance and changes in local bank market regulation and structure. Findings suggest that mergers or acquisitions of local banks by nonlocal banks need not impair local economic growth, and may even have beneficial effects in rural markets, with the possible exception of farm-dependent areas. These findings are derived from empirical models that relate both shortrun and longrun growth in real per capita personal income to geographic restrictions on bank activity, local bank (deposit) market concentration, local or nonlocal ownership of local bank offices, and local or nonlocal control of local bank deposits.

Keywords: Commercial Banking, Economic Growth, Geographic Liberalization, Bank Ownership

JEL Classification: G21, G28, O16

Suggested Citation

Collender, Robert N. and Shaffer, Sherrill, Local Bank Office Ownership, Deposit Control, Market Structure, and Economic Growth (May 2000). USDA Economic Research Service Technical Bulletin No. 1886. Available at SSRN: https://ssrn.com/abstract=236038 or http://dx.doi.org/10.2139/ssrn.236038

Robert N. Collender (Contact Author)

Federal Housing Finance Agency ( email )

1700 G Street NW
Washington, DC 20552
United States
202-343-1510 (Phone)
202-414-6502 (Fax)

Sherrill Shaffer

University of Wyoming ( email )

P.O. Box 3985
Laramie, WY 82071-3985
United States
307-766-2173 (Phone)
307-766-5090 (Fax)

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