Aggregate Bank Portfolio Statistics: Do They Tell Us Anything?
Article Abstract:
Aggregate ratios and statistics abstracted from total banking industry reports are often used by the Federal Reserve Banking System to monitor banking performance across the nation. These statistics measure such things as the ratio of loans to total loans and investments, business loan growth, and other supposedly significant information. A study of these statistics indicates that they are not valid for the purposes for which they are collected. They are inadequate at painting a picture of the banking industry because of the tremendous diversity within the industry. In addition they do not show movement within the system in relation to cycle. Even as an evaluative tool to measure performance of individual institutions against a norm, they fail to meet the mark. Analysts using these aggregate portfolio statistics should be wary. Tables are included.
Publication Name: Journal of Bank Research
Subject: Business
ISSN: 0021-9215
Year: 1983
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Entry and Performance in Financial Markets
Article Abstract:
Since it is axiomatic that free market entry improves market performance, a study was undertaken to determine the degree to which the two legal barriers to free bank entry into financial markets inhibits market performance. The two barriers to bank entry into financial markets are the requirements for a state charter, and the constraints against branch banking. Results indicate, all other factors being held equal, that free entry tends to hold down the interest rates being charged to customers, at least in the mortgage market. In addition, the same results were found when new branches were added, suggesting the possibility of some economies of scale.
Publication Name: Journal of Bank Research
Subject: Business
ISSN: 0021-9215
Year: 1983
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Bank Profitability and the Threat of Entry
Article Abstract:
A test of the implied negative relationship between profits and the threat of entry may be based on the knowledge of the potential entrants. Entry threat increases with the number of entrants and in the case of banks, above a certain amount in deposits. The test used Pennsylvania in 1970. The results are consistent with the negative relationship hypothesis. A detailed account of test computations is included.
Publication Name: Journal of Bank Research
Subject: Business
ISSN: 0021-9215
Year: 1983
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