Abstract

One determinant of market performance is the ability of new firms to enter markets. It is generally argued that the fewer the restrictions on entry, ceteris paribus, the more competitive a market will tend to be. Entry in the commercial banking market is restricted on at least two levels. One is that new entrants are required to obtain charters from either the Comptoller of the Currency or the state banking authority. The other is that the ability of a bank to branch is constrained by the branching laws of the state. Before one may recommend solutions to problems of performance in the commercial banking industry, an analysis of the effect from these barriers to entry on performance must be performed. Further than this, it is necessary to know if there exist difference impacts from these two levels of entry barriers before specific solutions to policy problems may be made.

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Economics

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Economics Commons

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URL: http://digitalcommons.calpoly.edu/econ_fac/116