是什么推动中小银行的持久性竞争力？【外文翻译】.doc

1、毕业论文外文翻译外文题目WHATDRIVESTHEPERSISTENTCOMPETITIVENESSOFSMALLBANK出处FINANCEANFECONOMICSDISCUSSIONSERIES20025作者BILLBASSETTANDTOMBRADYWHATDRIVESTHEPERSISTENTCOMPETITIVENESSOFSMALLBANKSBILLBASSETTANDTOMBRADYABSTRACTSEVERALTRENDSINTHEFINANCIALINDUSTRYCOULDHAVEWEAKENEDTHECOMPETITIVENESSOFSMALLBANKSINRECENTYEA

2、RSINCLUDINGCONSOLIDATIONANDIMPROVEDFINANCIALSTRENGTHOFLARGEBANKS,COMPETITIONFROMNONBANKFINANCIALFIRMS,ANDADECLINEINTHEREALVALUEOFDEPOSITINSURANCEDESPITETHOSECHALLENGES,SMALLBANKSHAVEGROWNMORERAPIDLYTHANLARGERBANKSOVERTHEPERIODFROM1985TO2001,ANDTHEIRPROFITABILITYHASBEENSUSTAINEDATHIGHLEVELSHOWEVER,SM

3、ALLBANKSHAVENEEDEDTOINCREASETHEINTERESTRATESOFFEREDONDEPOSITACCOUNTSINORDERTOATTRACTPROGRESSIVELYMOREDEPOSITFUNDINGINTHISPAPER,WEPROVIDEEMPIRICALEVIDENCETHATTHISINCREASEDINTERESTCOSTPRIMARILYREFLECTSTHEHIGHERRATEOFRETURNTHATSMALLBANKSWEREABLETOEARNONTHEIRASSETSMOREOVER,WESHOWWITHANARBITRAGEMODELTHAT

4、THEDECLINEINTHEREALVALUEOFDEPOSITINSURANCEHASONLYASMALLEFFECTONDEPOSITRATESASLONGASBANKFAILURERATESAREINTHELOWRANGEOFRECENTYEARSTHEFEDERALDEPOSITINSURANCECORPORATIONSFDICPROPOSALFORTHEMODERNIZATIONOFDEPOSITINSURANCEHASRECENTLYBEENTHEFOCUSOFCONSIDERABLEATTENTIONFDIC2000ASPARTOFITSPROPOSAL,THEFDICWOUL

5、DRAISETHECURRENT100,000CEILINGONCOVERAGEINORDERTOACCOUNTFORTHEEROSIONOFITSREALVALUEBYINFLATIONSINCEITWASSETIN1980CHART1THEDECLINEINTHEREALVALUEOFDEPOSITINSURANCEWOULDTENDTORAISETHECOSTOFFUNDINGASSETSWITHDEPOSITS,ANDTHUSCOULDADVERSELYAFFECTBANKSTHATTENDTORELYHEAVILYONDEPOSITSLARGEBANKS,WHICHFUNDTHEMS

6、ELVESRELATIVELYMOREINTHEUNINSUREDWHOLESALEMARKETS,COULDBELESSAFFECTEDTHANSMALLBANKSTHEDECLINEINTHEREALVALUEOFDEPOSITINSURANCE,HOWEVER,ISONLYONEOFSEVERALTRENDSINTHEFINANCIALINDUSTRYTHATCOULDHAVEWEAKENEDTHECOMPETITIVENESSOFSMALLBANKSINRECENTYEARSAMONGTHESEOTHERDEVELOPMENTSHAVEBEENTHERETURNTOHEALTHOFLA

7、RGEBANKS,NUMEROUSMERGERSTHATHAVEINCREASEDTHESIZEANDSCOPEOFLARGEBANKS,ANDTHECONTINUEDINCREASEINCOMPETITIONFROMMUTUALFUNDSANDOTHERNONBANKFINANCIALCOMPANIESMERGERSANDACQUISITIONSHAVEREDUCEDTHENUMBEROFBANKSINTHEUNITEDSTATESFROMMORETHAN14,000IN1985TOABOUT8,300ATTHEENDOF2000,ANDDURINGTHISTIMETHESHAREOFDOM

8、ESTICBANKINGASSETSHELDBYTHELARGEST100BANKSROSEFROMABOUTHALFTOALMOSTTHREEFOURTHSCHART2STUDIESOFCONSOLIDATIONINTHEBANKINGINDUSTRYANDOFITSIMPACTONSMALLBANKCOMPETITIVENESSHAVEREACHEDDIFFERINGCONCLUSIONSHOWEVER,CONSOLIDATIONINTERACTSWITHTHEDECLINEINTHEREALVALUEOFDEPOSITINSURANCETOCREATEANOTHERPOTENTIALLY

9、ADVERSEIMPACTONTHECOMPETITIVENESSOFSMALLBANKSTHECREATIONOF“MEGABANKS”INCREASESTHEPOSSIBILITYTHATDEPOSITORSWOULDCONSIDERTHESELARGERBANKSTOBE“TOOBIGTOFAIL”TBTF,WHICHWOULDIMPLICITLYCONFERAGREATERLEVELOFDEPOSITINSURANCEUPONLARGEBANKCUSTOMERSTHANTHOSEOFSMALLBANKSSMALLERBANKSCONTENDTHATANINCREASEINTHENOMI

10、NALVALUEOFDEPOSITINSURANCEISNEEDEDTOHELPOFFSETTHISPERCEPTIONOFATBTFPOLICYINDEPENDENTCOMMUNITYBANKERSASSOCIATION2000THEEVOLUTIONOFLARGE,COMPLEXBANKINGORGANIZATIONSHASLEDFEDERALBANKREGULATORSTOWARNTHATTHESEINSTITUTIONSCREATETHEPOTENTIALFORUNUSUALLYLARGESYSTEMICRISKSTOTHENATIONALANDINTERNATIONALECONOMI

11、ESSHOULDTHEYFAILGREENSPAN1999HOWEVER,THEFEDERALDEPOSITINSURANCECORPORATIONIMPROVEMENTACTOF1991FDICIACIRCUMSCRIBEDREGULATORSABILITYTOINVOKETBTFITREQUIREDTHATTHEFDICPURSUETHERESOLUTIONMETHODTHATPOSESTHELEASTCOSTTOITSINSURANCEFUNDWHENDEALINGWITHAFAILEDBANK,ANDSTIPULATEDTHATEXCEPTIONSTOTHE“LEASTCOST”MET

12、HODMUSTGARNERTHEAPPROVALOFSUPERMAJORITIESOFBOTHTHEFEDERALRESERVEANDFDICBOARDSPLUSTHATOFTHESECRETARYOFTHETREASURYINCONSULTATIONWITHTHEPRESIDENTOFTHEUNITEDSTATESANGBAZOANDSAUNDERS1997FOUNDTHECOSTOFFUNDSTOLARGEBANKSINCREASEDAFTERFDICIAWASIMPLEMENTED,SUGGESTINGTHATBANKCREDITORSBELIEVEDTHATFDICIAREDUCEDT

13、HELIKELIHOODOFALARGEBANKBENEFITINGFROMATBTFPOLICYMOREOVER,BANKREGULATORYAGENCIESMAINTAINTHATNOBANKISTOOLARGEFORSHAREHOLDERSANDNONDEPOSITLIABILITYHOLDERSTOFACECOMPLETELOSS,ANDFORUNINSUREDDEPOSITORSTOBESUBJECTTOLESSTHAN100PERCENTREIMBURSEMENT,SHOULDTHEDECLINEINBANKASSETVALUESBELARGEENOUGHGREENSPAN2001

14、INADDITIONTOTHECONSOLIDATIONOFTHEBANKINGSYSTEM,THECONTINUEDGROWTHOFNONBANKFINANCIALINSTITUTIONSMAYHAVEWEAKENEDTHECOMPETITIVESITUATIONOFSMALLRELATIVETOLARGEBANKSINRECENTYEARSDARISTAANDSCHLESINGER1993ALTHOUGHSAVINGSANDLOANASSOCIATIONS,CREDITUNIONS,MUTUALFUNDSANDFINANCECOMPANIESCOMPETEWITHBANKSOFALLSIZ

15、ES,THEYLIKELYPOSEAGREATERCOMPETITIVECHALLENGETOSMALLERBANKSINADDITIONTOBEINGMOREDEPENDENTONDEPOSITFUNDINGTHANTHELARGERBANKS,SMALLBANKSALSOTENDTOBEMORECONCENTRATEDTHANLARGEBANKSINTHETYPESOFLOANSEXTENDEDBYFINANCECOMPANIESDYNAN,JOHNSON,ANDSLOWINSKI2002OVERTHEPERIODSTUDIED,HOWEVER,ANOUTRIGHTDECLINEINTHR

16、IFTINDUSTRYASSETSOFFSETTHEADDEDCOMPETITIONFROMOTHERTYPESOFNONBANKFINANCIALCOMPANIES,PARTICULARLYMONEYMARKETMUTUALFUNDSINTHELATE1980SANDEARLY1990S,THECOMPETITIVEPOSITIONOFSMALLBANKSLIKELYWASBOOSTEDASARESULTOFTHEMORESEVEREDETERIORATIONINASSETQUALITYATLARGEBANKS,ANDTHEWIDERGAPATLARGEBANKSBETWEENACTUALC

17、APITALLEVELSANDTHOSEBEINGDEMANDEDBYMARKETSANDTHENEWBASLEACCORDCHART3HOWEVER,THESUBSEQUENTECONOMICRECOVERYANDBRISKEXPANSIONOFTHESECONDHALFOFTHE1990SCAUSEDDELINQUENCYRATESTODROPDRAMATICALLY,PARTICULARLYATLARGEBANKSATTHESAMETIME,THEGAPBETWEENTHELEVERAGERATIOSSMALLBANKSANDLARGEBANKSALSONARROWEDNOTICEABL

18、Y,ASLARGEBANKSBOOSTEDTHEIRCAPITALFOLLOWINGTHEIMPLEMENTATIONOFTHEBASLEACCORDSIN1991DESPITETHEAFOREMENTIONEDHEADWINDSAFFECTINGSMALLBANKSCOMPETITIVENESS,BASSETTANDBRADY2001FOUNDTHATSMALLBANKSHAVEGROWNMORERAPIDLYTHANLARGERBANKSOVERTHEPERIODFROM1985TO2000MOREOVER,THEYSHOWEDTHATSMALLBANKSHAVELARGELYMAINTA

19、INEDOREVENINCREASEDTHEIRLEVELSOFPROFITABILITYTHROUGHOUTMUCHOFTHEPERIODSTUDIED,DESPITEPAYINGINCREASINGLYLARGEPREMIUMSONTHEIRDEPOSITSRELATIVETOLARGEBANKSINORDERTOFUNDTHEIRMORERAPIDASSETEXPANSIONTHEPURPOSEOFTHISSTUDYISTOEXTENDTHISRESEARCHBYMOREFORMALLYEXAMININGTHEDIFFERENTIALIMPACTOFTHEINFLUENCESMENTIO

20、NEDABOVEONTHECOMPETITIVEPERFORMANCEOFSMALLBANKSOVERTHEPERIODFROMTHEMID1980STO2001FIRST,WEEMPLOYANARBITRAGEMODELTOEXAMINETHERELATIONSHIPBETWEENRELATIVEAVERAGEINTERESTRATESONDEPOSITSATSMALLANDLARGEBANKS,THELEVELOFDEPOSITINSURANCE,BANKFAILURERATES,ANDPERCEPTIONSABOUTTBTFTHEMODELDEMONSTRATESTHATTHESENSI

21、TIVITYOFRELATIVEDEPOSITRATESTOTHELEVELOFDEPOSITINSURANCEORVIEWSABOUTTHEIMPORTANCEOFTBTFISQUITELOWWHENBANKFAILURERATESARELOW,ASTHEYHAVEBEENINRECENTYEARSWETHENPRESENTECONOMETRICEVIDENCESUGGESTINGTHATTHERISINGRELATIVECOSTOFDEPOSITSATSMALLBANKSVISVISLARGEBANKSOVERTHEPASTDECADELARGELYREFLECTSSMALLBANKSNE

22、EDTOATTRACTFUNDINGTOSUSTAINTHEIRAGGRESSIVEANDPROFITABLEASSETEXPANSIONTHESHAREOFUNINSUREDDEPOSITS,WHICHHASRISENASTHEREALVALUEOFDEPOSITINSURANCEHASDECLINED,ANDAMARKEDIMPROVEMENTINTHEBALANCESHEETHEALTHOFLARGEBANKSDURINGTHE1990SPLAYEDSOMEWHATSMALLERROLESINBOOSTINGDEPOSITRATESATSMALLBANKSTHENEXTSECTIONDE

23、SCRIBESTHEDATAUSEDINTHEARTICLEANDIDENTIFIESSOMEKEYBALANCESHEETDIFFERENCESBETWEENLARGEANDSMALLBANKSSECTIONIIIILLUSTRATESTHATSMALLBANKSHAVEBEENABLETOGROWFASTERTHANLARGEBANKSBYOFFERINGBETTERDEPOSITRATESANDTHATTHEPREMIUMTHEYPAYHASBEENRISINGOVERTIMESECTIONIVPRESENTSANARBITRAGEMODELOFDEPOSITPRICINGATLARGE

24、ANDSMALLBANKSTHATINCORPORATESDEPOSITINSURANCEAND“TOOBIGTOFAIL”EFFECTSSECTIONVPRESENTSREGRESSIONESTIMATESFROMAREDUCEDFORMMODELOFDEPOSITRATEDETERMINATIONATLARGEANDSMALLBANKSCONCLUSIONSAREPRESENTEDINSECTIONVIIIDATAANDSUMMARYSTATISTICSEXCEPTWHEREOTHERWISEINDICATED,DATAINTHISPAPERAREFROMTHEQUARTERLYREPOR

25、TSOFCONDITIONANDINCOMECALLREPORTSFORTHEDOMESTICOFFICESOFINSUREDDOMESTICALLYCHARTEREDCOMMERCIALBANKSANDNONDEPOSITTRUSTCOMPANIESHEREAFTER,BANKSINTHISARTICLE,LARGEBANKSARETHOSERANKED1THROUGH100BASEDONASSETSATTHESTARTOFEACHQUARTERSMALLBANKSARETHOSERANKEDOUTSIDEOFTHELARGEST1,000ATTHESTARTOFTHEFOURTHQUART

26、EROF2000,LARGEBANKSHADASSETSOFATLEAST694BILLION,WHILEALLSMALLBANKSHADASSETSOFLESSTHAN331MILLIONAKEYBALANCESHEETDIFFERENCESBETWEENSMALLANDLARGEBANKSSMALLBANKSRELYCONSIDERABLYMOREONDEPOSITSTHANDOLARGEBANKSINPARTICULAR,SMALLTIMEDEPOSITSTHOSEISSUEDINAMOUNTSOFLESSTHAN100,000FUNDEDALMOST30PERCENTOFLOANSAN

27、DOTHERASSETSATSMALLBANKSIN2000,WHILEATLARGEBANKSTHESHAREWAS10PERCENTTABLE1THESHAREOFSMALLBANKSASSETSFUNDEDWITHLARGETIMEDEPOSITS,13PERCENT,ALSOEXCEEDSTHATATLARGEBANKS,8PERCENTOTHERINTERESTBEARINGDEPOSITS,WHICHCONSISTOFSAVINGSANDTRANSACTIONSACCOUNTS,ALSOWERESOMEWHATMOREIMPORTANTFUNDINGVEHICLESATSMALLB

28、ANKS,WHILENONINTERESTBEARINGDEPOSITSFUNDEDCOMPARABLESHARESOFSMALLANDLARGEBANKSASSETSIN2000LARGEBANKSFUNDEDABOUTONETHIRDOFTHEIRASSETSWITH“OTHER“NONDEPOSITLIABILITIESIN2000,WHEREASATSMALLBANKSTHESHAREWASJUST3PERCENTSMALLBANKSAVAILEDTHEMSELVESSOMEWHATMOREOFFHLBADVANCES,ALTHOUGHTHESEREPRESENTAFAIRLYSMAL

29、LSHAREOFLIABILITIESATBOTHGROUPSOFBANKSEQUITYALSOFUNDEDALARGERSHAREOFASSETSATSMALLTHANATLARGEBANKS,103PERCENTAND8PERCENTRESPECTIVELYRELIANCEONDEPOSITSCHANGEDLITTLEBETWEEN1987AND1992,BUTBOTHBANKGROUPSSHIFTEDTOWARDNONDEPOSITLIABILITIESANDCAPITALASSOURCESOFFUNDINGDURINGTHE1990SBETWEEN1992AND2000,DEPOSIT

30、SASASHAREOFASSETSFELLABOUT4PERCENTAGEPOINTSATSMALLBANKSAND10PERCENTAGEPOINTSATLARGEBANKSFORBOTHBANKGROUPS,“OTHERINTERESTBEARINGDEPOSITS“WASTHEDEPOSITCATEGORYTHATFELLMOSTINTHE1990S,ALTHOUGHATLARGEBANKS“NONINTERESTBEARINGDEPOSITS”DECLINEDALMOSTASMUCHSMALLTIMEDEPOSITSWHICHAREFULLYINSUREDDECLINEDBYSIMIL

31、ARAMOUNTSATBOTHBANKGROUPS,ADROPPROBABLYREFLECTINGTHEINCREASEDPOPULARITYOFALTERNATIVEHOUSEHOLDINVESTMENTVEHICLESSUCHASMUTUALFUNDSHOWEVER,THESHAREOFASSETSFUNDEDBYLARGETIMEDEPOSITSACTUALLYINCREASEDATBOTHBANKGROUPS,WITHALARGERINCREASEPOSTEDATSMALLBANKSATSMALLBANKS,THETYPEANDAVERAGESIZEOFLARGEDEPOSITACCO

32、UNTSALLTHOSEOFATLEAST100,000ARENOTABLYDIFFERENTFROMTHOSEATLARGEBANKSTABLE1,MEMOATLARGEBANKS,ONLYABOUT30PERCENTOFSUCHBALANCESWEREHELDASLARGETIMEDEPOSITSIN2000THEREMAINING70PERCENTWEREINTRANSACTIONANDSAVINGSACCOUNTSATSMALLBANKS,LARGEBALANCESARESPLITABOUTEVENLYBETWEENLARGETIMEANDOTHERDEPOSITSTHEAVERAGE

33、SIZEOFLARGEDEPOSITSATLARGEBANKSIN2000WAS425,000,ANDATSMALLBANKSITWAS229,000HOWEVER,OVERTHE1990STHEAVERAGESIZEDECLINEDATLARGEBANKSANDROSEATABOUTTHERATEOFINFLATIONATSMALLBANKSBGROWTHPATTERNSFORLARGEANDSMALLBANKSASNOTED,THEMERGERSTHATHAVEBEENTHEVEHICLEOFCONSOLIDATIONTYPICALLYHAVEINVOLVEDTHEACQUISITIONO

34、FSMALLERBANKSBYMUCHLARGERBANKSTHIS,OFCOURSE,BOOSTSMEASUREDGROWTHOFLARGEBANKSANDDIMINISHESTHATOFSMALLBANKSTOACCOUNTFORTHISINEXAMININGTHEBALANCESHEETGROWTHANDPROFITABILITYOFSMALLVISVISLARGEBANKS,WEMERGERADJUSTDATAFROMTHEQUARTERLYREPORTSOFCONDITIONANDINCOME,FILEDBYALLFEDERALLYINSUREDCOMMERCIALBANKSBALA

35、NCESHEETDATAADJUSTEDFORMERGERSSHOWTHATSMALLBANKSGENERALLYHAVEGROWNFASTERTHANEITHERMEDIUMSIZEDORLARGEBANKSOVERTHEPASTFIFTEENYEARSCHART4,TOPPANELINDEED,INEVERYYEAR,THEGROWTHOFASSETSHASBEENSIGNIFICANTLYFASTERATSMALLBANKSTHANATLARGEBANKSOFCOURSE,BANKSSECURITIZEANDSELLASIGNIFICANTPORTIONOFTHECONSUMERANDR

36、EALESTATELOANSTHATTHEYORIGINATEANDTHEREBYMOVETHEMOFFTHEIRBALANCESHEETSBUTDATAAVAILABLESINCE1997INDICATETHATRESTORINGSECURITIZEDCREDITCARDLOANSTOLARGEBANKSBALANCESHEETSWOULDNOTNARROWTHEDIFFERENCEINGROWTHRATESSIGNIFICANTLYOFCOURSE,ADDINGSECURITIZEDASSETSTOTHEBALANCESHEETFORPURPOSESOFCOMPARISONPRESUMES

37、THATTHESECURITIZINGBANKSTILLWOULDHAVECHOSENTOORIGINATETHELOANSEVENIFTHEOPPORTUNITYTOSECURITIZEWASNOTAVAILABLEINADDITION,ANAVERAGEOFABOUT350NEW,OR“DENOVO,“BANKSWEREFORMEDEACHYEARDURINGTHE19972000PERIOD,COMPAREDWITHABOUT150PERYEARDURINGTHEPRECEDINGFOURYEARSALTHOUGHDENOVOBANKSTENDTOGROWRAPIDLY,THEGROWT

38、HRATEOFALLSMALLBANKSISNOTSIGNIFICANTLYAFFECTEDIFDENOVOBANKSAREEXCLUDEDFROMTHECALCULATIONMOREOVER,THEACCELERATEDPACEOFENTRYINTOAFASTGROWINGSECTORPROVIDESSUBSTANTIALEVIDENCEOFTHEATTRACTIVENESSOFSMALLBANKSTOINVESTORSASSUGGESTEDBYTHERELATIVERATESOFMERGERADJUSTEDASSETGROWTH,THEEXPANSIONOFTOTALDEPOSITSATS

39、MALLBANKSHASALSOEXCEEDEDTHEGROWTHRATEATLARGEBANKSINEVERYYEARSINCE1985,AFTERADJUSTINGFORMERGERSCHART4,MIDDLEPANELUNINSUREDDEPOSITSALSOGREWSIGNIFICANTLYFASTERATSMALLBANKSTHANATLARGEBANKSCHART4,BOTTOMPANELFURTHERMORE,THEGROWTHRATEOFUNINSUREDDEPOSITSATSMALLBANKSHASBEENHIGHANDSTEADILYINCREASINGDURINGTHES

40、ECONDHALFOFTHEPASTDECADE,WHEREASATLARGERBANKSTHEGROWTHOFTHESELIABILITIESSHOWSNOTRENDHOWEVER,THEGROWTHOFASSETSTENDEDTOEXCEEDTHATOFDEPOSITS,ASTHEUSEOFNONDEPOSITLIABILITIESGREWFORALLBANKSIZEGROUPSIIIHOWHAVESMALLBANKSEXPANDEDDEPOSITSFASTERTHANLARGEBANKSCHART5EXAMINESTHECONNECTIONBETWEENRELATIVERATESPAID

41、ONDEPOSITSATSMALLANDLARGEBANKSANDRELATIVEDEPOSITGROWTHRATES,FORVARIOUSDEFINITIONSOFDEPOSITSTHESOLIDLINEINALLFOURPANELSISTHEDIFFERENCE,EXPRESSEDINBASISPOINTS,BETWEENTHEAVERAGEINTERESTRATESPAIDFORDEPOSITSBYSMALLANDLARGEBANKSSIMILARLY,THEDOTTEDLINEDEPICTSTHEGROWTHRATEOFDEPOSITSATSMALLBANKSLESSTHEGROWTH

42、RATEATLARGEBANKS,EXPRESSEDINPERCENTAGEPOINTSGROWTHOFTOTALINTERESTBEARINGDEPOSITSATSMALLBANKSCONSISTENTLYEXCEEDEDTHATATLARGEBANKSBETWEEN1985AND2000BYAMOUNTSTHATTENDEDTOREFLECTMOVEMENTSINTHESPREADBETWEENDEPOSITRATESPAIDATSMALLRELATIVETOLARGEBANKSCHART5,UPPERLEFT。ASTHEPERIODBEGAN,SMALLBANKSWEREOUTBIDDI

43、NGLARGEBANKSFORDEPOSITS,BUTTHISRELATIONSHIPREVERSEDINTHELATE1980SANDINTO1990,ASHIFTTHATSEEMEDTOPROMPTARELATIVEACCELERATIONOFGROWTHOFDEPOSITSATLARGEBANKSDURINGTHE199193PERIOD,SMALLBANKSRAISEDTHEIRAVERAGERATEPAIDONINTERESTBEARINGDEPOSITSBYABOUTAFULLPERCENTAGEPOINTRELATIVETORATESATLARGEBANKS,RESTORINGT

44、HEPREMIUMPAIDBYTHEMINTHEMID1980SEVIDENTLYASARESULT,THEGROWTHRATEOFDEPOSITSATSMALLBANKSROSESUBSTANTIALLYCOMPAREDWITHTHATATLARGEBANKSDURINGTHESEYEARSHOWEVER,EVENTHOUGHTHEDEPOSITRATESPREADFAVORINGSMALLBANKSREMAINEDELEVATEDAND,ONBALANCE,ROSESOMEWHATOVERTHECOURSEOFTHE1990S,THEAMOUNTBYWHICHDEPOSITGROWTHAT

45、SMALLBANKSEXCEEDEDTHATATLARGEBANKSTRENDEDDOWNOVERMOSTOFTHEDECADETHEREMAININGPANELSPRESENTTHESAMERELATIONSHIPBETWEENRELATIVEDEPOSITOFFERINGRATESANDRELATIVEDEPOSITGROWTHRATESFORDEPOSITSDISAGGREGATEDINTOSMALLTIME,LARGETIME,ANDOTHERINTERESTBEARINGDEPOSITSTHISGREATERDETAILREVEALSTHATTHEPOSITIVECORRELATIO

46、NBETWEENRELATIVOFFERINGRATESANDRELATIVEDEPOSITGROWTHRATESATSMALLBANKSGENERALLYHELDUPFORSMALLTIMEDEPOSITSOVERTHEENTIREPERIODEXAMINED,BUTTENDEDTODIMINISHDURINGTHELATTER1990SINTHELARGETIMEAND“OTHER”DEPOSITCOMPONENTSTHEDIFFERENCEBETWEENTHEBEHAVIOROFSMALLTIMEANDTHEREMAININGCATEGORIESOFINTERESTBEARINGDEPO

47、SITSMAYREFLECTTHEFACTTHATSMALLTIMEDEPOSITSAREBYDEFINITIONFULLYINSUREDWHILETHEOTHERCATEGORIESHAVELARGEUNINSUREDCOMPONENTSTHERELATIVERISEINDEPOSITINTERESTRATES,HOWEVER,DIDNOTSIGNIFICANTLYAFFECTSMALLBANKSPROFITABILITY,ASTHERISEWASAPPARENTLYOFFSETBYHIGHERRATESEARNEDONASSETSATSMALLBANKSNETINTERESTMARGINS

48、NIMATSMALLBANKSHAVETRADITIONALLYBEENSUBSTANTIALLYGREATERTHANATTHELARGEST100BANKS,ANDDURINGMOSTOFTHESECONDPARTOFTHE1990S,THENIMATSMALLBANKSHELDSTEADY,WHILEITEDGEDDOWNATLARGEBANKSCHART6INPART,SMALLBANKSMAINTAINEDTHEIRNIMBYINCREASINGTHESHAREOFTHEIRPORTFOLIOSHELDASLOANSWHICH,ONAVERAGE,EARNHIGHERYIELDSTH

49、ANSECURITIESTHROUGHOUTTHE1990SALTHOUGHTHENIMATSMALLBANKSBEGANTONARROWSOMEWHATMOREOVERTHEPASTTHREEYEARSANDFELLBELOWITSLATE1980SLEVEL,THATDECLINEHASBEENMATCHEDBYASIMILARFALLOFFATLARGEBANKSTURNINGTOBROADERMEASURESOFPROFITABILITY,RETURNONEQUITYROEATLARGEBANKSHASSTABILIZEDAROUNDANAVERAGEOFABOUT15PERCENTTHROUGHOUTTHEMIDTOLATE1990SSMALLBANKSROEHASALSOBEENFAIRLYSTABLEDURINGTHE1990S,ANDISUNIFORMLYABOVETHERETURNSEARNEDDURINGTHELATE1980SWHILEROEATLARGEBANKSHASBEENSIGNIFICANTLYGREATERTHANROEATSMALLBANKSSINCE1992,THISISINLARGEPARTDUETOTHEMUCHGREATERLEVELSOFCAPITALRELATIVETOASSETSHELDBYSMALLBANKS