Changes in the Distribution of Banking Offices

By Avery, Robert B.; Bostic, Raphael W. et al. | Federal Reserve Bulletin, September 1997 | Go to article overview

Changes in the Distribution of Banking Offices


Avery, Robert B., Bostic, Raphael W., Calem, Paul S., Canner, Glenn B., Federal Reserve Bulletin


Over the past twenty years, major structural changes, including rapid consolidation among institutions, have altered the shape of the banking industry. Structural change has been driven by advances in technology, efforts to increase efficiency and reduce costs, the general performance of the economy, and the globalization of financial services markets. Deregulation of various aspects of banking, including a relaxation of regulatory restrictions on the ability of banking organizations to purchase other institutions and to establish branch offices, has also contributed significantly to the changes in banking structure.

Consolidation in the industry has resulted from mergers of previously independent institutions, the failure of a large number of commercial banks and savings associations (savings banks and savings and loan associations), and consolidation within bank holding companies. Industry analysts have advanced certain explanations for the drive to consolidate. In one view, consolidation is primarily a response to an oversupply of banking institutions and offices, or "overcapacity." Overcapacity has resulted from advances in technology, the easing of some regulatory restrictions, and inroads by nonbank financial institutions into traditional banking service markets. Another view is that some consolidation is motivated by strategic considerations and may, in some cases, have anticompetitive effects.

These structural changes may have influenced the distribution of banking offices, that is, their number and location.(1) This article explores the relationship between these changes and the distribution of offices between 1975 and 1995, particularly across neighborhoods grouped by the median income of residents and location (central city, suburban, or rural). The examination is restricted to "brick and mortar" offices, which traditionally have been the most important delivery system that banking institutions use to provide products and services to households and business customers.(2) In these offices, customers can conduct a host of deposit, borrowing, and other financial transactions through tellers, loan officers, and other customer service representatives.

Although much discussion about the possible effects of structural changes in banking on branching activity has taken place, only limited information has been available for a systematic analysis of this issue. This analysis relies on a new, specially constructed database that combines information on banking office locations, mergers and consolidations, failures of commercial banks and savings associations, and neighborhood economic and demographic characteristics. The Federal Reserve's National Information Center database, supplemented with data supplied by the Office of Thrift Supervision, was used to track mergers, acquisitions, and failures over time. Information from the Census of Population and Housing for 1970, 1980, and 1990 and Bureau of the Census estimates for the intervening years were used to assign economic and demographic characteristics to the geographic area containing each banking office. Appendix A provides details on the construction of the database used in this article.

These structural and distributional changes have raised some public concerns. One concern is that consolidation will tend to reduce the number of banking offices and possibly the availability of services. Another is that banks and savings associations may be closing offices and reorienting their office networks to the benefit of more affluent customers at the expense of lower-income communities. Legislators and regulators have addressed these varied concerns through laws and regulations intended to help ensure that all segments of the public have access to banking services. The analysis in this article focuses on the structural and distributional changes in the banking industry in light of these concerns.

General Trends in Distribution

According to the data, the number of banking institutions declined between 1975 and 1995. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Changes in the Distribution of Banking Offices
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.