Market Definition in Banking: Recent Evidence
Dean F. Amel
Federal Reserve Board - Financial Structure Section
American University - Department of Economics
February 14, 2001
FEDS Discussion Paper No. 2001-16
Antitrust analysis of bank mergers defines banking markets to be geographically local and to consist of the cluster of financial products supplied by commercial banks. This definition is based on assumptions about households' and small businesses' behavior in purchasing banking services. This article utilizes data from the Survey of Consumer Finances to examine how households' use of financial services and institutions changed between 1989 and 1998.
We investigate the extent to which households still focus their purchases of financial services at local depository institutions, as opposed to non-depository or distant institutions, and examine the extent to which purchases are clustered at a single institution. Overall, the results indicate that households continue, to a substantial degree, to obtain certain key asset services, notably checking accounts, at local depository institutions.
Number of Pages in PDF File: 26
Keywords: Market definition, antitrust, banking
JEL Classification: L4, G21, G28
Date posted: May 4, 2001