Working Paper

Banking market conditions and deposit interest rates

Abstract: This paper addresses the impact market conditions on bank deposit interest rates. Examining data for 1988-2000, we find that rates are affected by market size structure (defined as the distribution of market shares of banks of different sizes whether or not the market share is achieved entirely in that local market). This is in addition to the effects of market concentration noted in earlier work. We also find large differences between urban and rural markets. In rural areas, changes in market concentration have no effect on deposit rates. These findings have implications for antitrust policy in banking.

Keywords: Bank deposits; Interest rates;

Bibliographic Information

Provider: Federal Reserve Bank of Chicago

Part of Series: Working Paper Series

Publication Date: 2003

Number: WP-03-19