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Local or state? Evidence on bank market size using branch prices
With the elimination of state laws against branching, banks can now compete across states. They are no longer limited to competing in local markets, defined by the Federal Reserve as metropolitan statistical areas or small groups of rural counties. Accordingly, a "local or state?" debate over market size is taking place among researchers, with some arguing that banking markets are statewide and others contending that they remain local. This article contributes to the debate with a novel, arguably better, indicator of market size: bank branch prices, as opposed to bank deposit rates. The ...