Working Paper

Market definition in banking: recent evidence

Abstract: 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.

Keywords: Bank mergers;

Bibliographic Information

Provider: Board of Governors of the Federal Reserve System (U.S.)

Part of Series: Finance and Economics Discussion Series

Publication Date: 2001

Number: 2001-16