Market_Structure_and_Regulation_in_the_U.S._Banking_Industry

Market_Structure_and_Regulation_in_the_U.S._Banking_Industry...

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Unformatted text preview: Market Structure and Regulation in the U.S. Banking Industry Professor Wayne Carroll Department of Economics University of Wisconsin-Eau Claire [email protected] Slides available at www.uwec.edu/carrolwd Roles of Banks in the Economy Facilitate borrowing and lending Facilitate payments Risk management Issue financial assets that allow firms to share risks Provide guarantees and lines of credit Role of Banks in Lending Sources of External Funding for Business 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% bank loans non-bank loans bonds new equity USA Germany Japan Source: Available online at http://www.wiwi.uni-frankfurt.de/schwerpunkte/finance/wp/550.pdf Financial Intermediaries “Banks” include: Commercial banks Savings and loan associations (S&L’s) Also sometimes called “thrifts” or “thrift institutions” Credit unions Financial Intermediaries Assets at end of 2002 (in billions) Credit Unions: $553 S & L's: $1,338 Banks: $7,161 Ownership of Banks U.S. banks are privately owned – no banks are owned by the government. In most cases a bank’s stock is held by a large number of investors, so a bank has many “owners.” It is relatively easy to establish a new bank in the U.S. Bank Market Structure There are a large number of banking firms in the U.S., but the number is falling due to mergers between banks. Thousands of U.S. banks are very small, each having only a single office. Many banks today have multiple branches or offices. A “bank holding company” is a firm that owns one or more banking firms. Size Distribution of U.S. Banks Commercial Banks Number of Deposits (millions) Asset Size (as of June 30, 2006) Institutions Offices Less than $25 Million 586 712 $7,661 $25 Million to $50 Million 1,098 1,701 $33,511 $50 Million to $100 Million 1,718 4,007 $105,754 $100 Million to $300 Million 2,427 10,338 $349,740 $300 Million to $500 Million 672 5,088 $211,495 $500 Million to $1 Billion 494 6,322 $265,540 $1 Billion to $3 Billion 275 6,856 $338,909 $3 Billion to $10 Billion 120 6,601 $427,340 Greater than $10 Billion 89 38,848 $3,580,817 TOTALS 7,479 80,473 $5,320,767 Source: www2.fdic.gov/sod/index.asp Bank Market Structure: An Example Wells Fargo & Company is a bank holding company based in South Dakota (with historic roots in Minnesota and California). It includes: 28 chartered bank companies a total of over 3,000 branches in 23 states Some Wells Fargo branches Wells Fargo’s Broad Scope Community Banking 34% Investments and Insurance 15% Specialized Lending 15% Consumer Finance 7% Home Mortgage and Home Equity 20% Wholesale Banking/ Commercial Real Estate 9% Source: www.wellsfargo.com/about/today1 20 Largest U.S. Banks (as of June 30, 2006) Rank Institution Name State Headquartered Number of Offices Deposits (thousands) 1 Bank of America, NA North Carolina 5,781 $563,906,844 2 JPMorgan Chase Bank, NA Ohio 2,679 $434,752,000 3 Wachovia Bank, NA North Carolina...
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This note was uploaded on 05/20/2010 for the course DOF AAf001-6 taught by Professor Changchungdo during the Spring '10 term at 카이스트, 한국과학기술원.

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Market_Structure_and_Regulation_in_the_U.S._Banking_Industry...

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