Keywords: Banking, markets, antitrust
Abstract: In the United States, antitrust authorities rely heavily on numerical
measures of local banking market concentration such as the Herfindahl
Hirschmann Index to assess the likely competitive effects of proposed
bank mergers and acquisitions. This approach to antitrust enforcement
relies on two important assumptions: (1) that markets for at least
some types of banking products are local in scope, and (2) that market
concentration measures can serve as effective proxies for banks'
abilities to extract monopoly rents. This paper uses balance sheet
data from most banks operating in the United States in 1988, 1992,
1996, and 1999 to test these assumptions.
Full paper (93 KB PDF)
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Last update: October 10, 2002