August 9, 2000


Enclosed is the latest issue of the New York Fed’s Current Issues in Economics and Finance, Explaining the Rising Concentration of Banking Assets in the 1990s, by Kevin J. Stiroh and Jennifer P. Poole.

The main conclusions of the study are as follows:

  • Industry data for 1990-99 suggest that the increased market share of the largest bank holding companies is attributable almost entirely to external growth through mergers and acquisitions, rather than internal growth of the holding companies’ subsidiaries.
  • Although the largest bank holding companies control a growing market share, these institutions actually grew more slowly than smaller institutions after one accounts for the effects of consolidation.
  • As the industry evolves from a fractured banking system, large bank holding companies appear to be choosing a more consolidated, and likely more efficient, industry structure.

Kevin J. Stiroh is an economist and Jennifer P. Poole is an assistant financial analyst at the New York Fed.

Contact: Douglas Tillett

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