Market_Structure_and_Regulation_in_the_U.S._Banking_Industry

Market_Structure_and_Regulation_in_the_U.S._Banking_Industry...

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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
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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
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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
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Financial Intermediaries “Banks” include: Commercial banks Savings and loan associations (S&L’s) Also sometimes called “thrifts” or “thrift institutions” Credit unions
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Financial Intermediaries Assets at end of 2002 (in billions) Credit Unions: $553 S & L's: $1,338 Banks: $7,161
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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.
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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.
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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
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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
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Some Wells Fargo branches
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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
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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 3,136 $306,348,000 4 Wells Fargo Bank, NA South Dakota 3,200 $298,672,000 5 Washington Mutual Bank Nevada 2,167 $209,927,984 6 Citibank, NA New York 267 $142,508,000 7 SunTrust Bank Georgia 1,758 $117,956,301 8 U.S. Bank, NA Ohio 2,525 $117,337,830 9 HSBC Bank USA, NA Delaware 436 $75,588,320 10 World Savings Bank, FSB California 286 $61,321,407 11 PNC Bank, NA Pennsylvania 831 $58,134,805 12 Keybank, NA Ohio 957 $57,327,323 13 Regions Bank Alabama 1,397 $57,231,022 14
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  • Spring '10
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  • Fractional-reserve banking, Federal Deposit Insurance Corporation, Bank run, Continental Illinois Bank

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