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
