Changes in the Size Distribution of U.S. Banks: 1960—2005 by Hubert P. Janicki and Edward Simpson Prescott
Banks are viewed as pillars of local communities, but recently the banking industry has experienced significant consolidation, with many community banks being acquired by larger institutions. Are we headed toward a day when there will be just a few huge banks operating throughout the country? Hubert P. Janicki and Edward S. Prescott examine changes in the size distribution of U.S. banks from the period 1960 to 2005, and find that although the ten largest banks increased their share of the banking industry’s assets from 21 to almost 60 percent during this period, many small and mid-size banks continue to exist and thrive. Janicki and Prescott present the key facts that a theory of bank size distribution should explain and argue that such a theory could be useful in helping us understand future consolidation in the banking industry.
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