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The Perceived Size Of Small Business Banking Markets

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  • Dean F. Amel
  • Kenneth P. Brevoort

Abstract

Definition of markets is fundamental to any analysis of competition and is the first step in enforcement of antitrust statutes. In the banking industry, geographic market definitions have been the subject of considerable discussion in recent years. This paper utilizes a survey conducted by the National Federation of Independent Business Research Foundation in 2001. The survey asked a variety of questions relating to American small businesses' experience with financial institutions, including a question asking how many banks were in the market area where the small firm did most of its business. Using the zip code of the survey respondent, this answer was compared with the number of banks in the same county, in the same metropolitan area, or in the local banking market as defined by the Federal Reserve. The results show that both urban and rural markets as perceived by small businesses are considerably smaller than markets as defined by either the US Department of Justice or the Federal Reserve.

Suggested Citation

  • Dean F. Amel & Kenneth P. Brevoort, 2005. "The Perceived Size Of Small Business Banking Markets," Journal of Competition Law and Economics, Oxford University Press, vol. 1(4), pages 771-784.
    • Handle: RePEc:oup:jcomle:v:1:y:2005:i:4:p:771-784.
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    File URL: http://hdl.handle.net/10.1093/joclec/nhi021
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    References listed on IDEAS

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    1. Robert M. Adams & Kenneth P. Brevoort & Elizabeth K. Kiser, 2007. "Who Competes With Whom? The Case Of Depository Institutions," Journal of Industrial Economics, Wiley Blackwell, vol. 55(1), pages 141-167, March.
    2. Lawrence J. Radecki, 1998. "The expanding geographic reach of retail banking markets," Economic Policy Review, Federal Reserve Bank of New York, vol. 4(Jun), pages 15-34.
    3. Myron L. Kwast & Martha Starr-McCluer & John D. Wolken, 1997. "Market definition and the analysis of antitrust in banking," Finance and Economics Discussion Series 1997-52, Board of Governors of the Federal Reserve System (U.S.).
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    Cited by:

    1. Giovanni Dell’Ariccia & Dalida Kadyrzhanova & Camelia Minoiu & Lev Ratnovski, 2021. "Bank Lending in the Knowledge Economy," The Review of Financial Studies, Society for Financial Studies, vol. 34(10), pages 5036-5076.
    2. Allen N. Berger & Christa H. S. Bouwman & Lars Norden & Raluca A. Roman & Gregory F. Udell & Teng Wang, 2024. "Piercing through Opacity: Relationships and Credit Card Lending to Consumers and Small Businesses during Normal Times and the COVID-19 Crisis," Journal of Political Economy, University of Chicago Press, vol. 132(2), pages 484-551.
    3. Adams, Robert M. & Amel, Dean F., 2011. "Market structure and the pass-through of the federal funds rate," Journal of Banking & Finance, Elsevier, vol. 35(5), pages 1087-1096, May.
    4. Kenneth P. Brevoort & John D. Wolken, 2008. "Does distance matter in banking?," Finance and Economics Discussion Series 2008-34, Board of Governors of the Federal Reserve System (U.S.).
    5. Heng Chen & Matthew Strathearn, 2020. "A Spatial Model of Bank Branches in Canada," Staff Working Papers 20-4, Bank of Canada.
    6. Degryse, H.A. & Cerqueiro, G.M. & Ongena, S., 2007. "Distance, Bank Organizational Structure and Credit," Other publications TiSEM 34c2f607-3395-4fd9-9c52-4, Tilburg University, School of Economics and Management.
    7. Dean F. Amel & Arthur B. Kennickell & Kevin B. Moore, 2008. "Banking market definition: evidence from the Survey of Consumer Finances," Finance and Economics Discussion Series 2008-35, Board of Governors of the Federal Reserve System (U.S.).
    8. Adams, Robert M. & Brevoort, Kenneth P. & Driscoll, John C., 2023. "Is lending distance really changing? Distance dynamics and loan composition in small business lending," Journal of Banking & Finance, Elsevier, vol. 156(C).
    9. Scott, Jonathan A. & Dunkelberg, William C., 2010. "Competition for small firm banking business: Bank actions versus market structure," Journal of Banking & Finance, Elsevier, vol. 34(11), pages 2788-2800, November.
    10. Alexander Conrad & Alexander Hoffmann & Doris Neuberger, 2018. "Physische und digitale Erreichbarkeit von Finanzdienstleistungen der Sparkassen und Genossenschaftsbanken [Physical and digital accessibility of financial services at savings and cooperative banks]," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 38(2), pages 255-284, October.

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