Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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Tuesday, March 11, 2008

Geographic Deregulation and Competition in the U.S. Banking Industry

Posted by D. Daniel Sokol

H. Semih Yildirim, York University - Atkinson School of Administrative Studies and Sunil Mohanty, University of St. Thomas - College of Business bring us Geographic Deregulation and Competition in the U.S. Banking Industry.

ABSTRACT: We examine the effects of geographic deregulation on state-level competition in U.S. banking markets over the period 1976-2005. The empirical results confirm that the U.S. banks in general operated under monopolistic competition during the period examined. After partitioning the sample based on bank size we find that the market competition for large banks in Delaware, Oregon, and Rhode Island can be characterized as monopolistic while small banks in Arizona and Massachusetts seem to have operated under the conditions of perfect competition. The removal of geographic restrictions appears to have very limited and non-uniform effect on state-level competitive conduct. There is some evidence that the U.S. banking industry might have actually experienced a less competitive behavior in recent years due to increased market power of larger banks.

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