The Profitability of Small, Single-Market Banks in an Era of Multimarket Banking
28 Pages Posted: 14 Dec 2006
Date Written: October 2006
Abstract
This paper examines the relationship between multimarket bank presence and the profitability (and therefore viability) of small, single-market banks. We find that increased presence of multimarket banks is associated with a significant reduction in the profitability of small, single-market banks operating in rural banking markets, but not of those operating in urban markets. We explore this relationship by breaking single-market bank profits down into several components in order to shed light on the mechanisms through which multimarket bank presence might influence the profitability of single-market banks.
Keywords: Banks, competition, pricing
JEL Classification: G21, L10
Suggested Citation: Suggested Citation
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