Compositional dynamics and the performance of the U.S. banking industry
By: Kevin J. Stiroh.
Contributors: Federal Reserve Bank of New York.
Series: Staff reports ;; no. 98; Staff reports (Federal Reserve Bank of New York : Online) ;; no. 98.
Publisher: Federal Reserve Bank of New York
Published: 2000
Place of publication: [New York, N.Y.]
Language: eng
Format: Electronic resource
Subjects: Banks and banking -- United States.; Bank profits -- United States.
Description: "As the U.S.  banking industry continuously evolves, changes in industry composition have a direct impact on the aggregate performance of the industry.  This paper presents a new decomposition framework for commercial banks and shows that both firm-level changes and dynamic reallocation effects--due to increased market share of successful banks, exit of poor performers, and new entrants--made substantial contributions to changes in profitability and capitalization of the U.S.  banking industry from 1976 to 1998.  In periods of declining profits, these reallocations were particularly important, increasing industry return on equity by several percentage points in the late 1980s and stabilizing industry performance.  In the late 1990s, however, the reallocation effects turned negative and lowered industry profits as growing banks showed declining profits on net.  These results provide a new perspective for understanding the impact of changes in competition on the performance of the U.S.  banking industry"--Federal Reserve Bank of New York web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 2/16/2005.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.