tailieunhanh - Improved measures of commercial banking output and productivity

Until the early 1980s, banking was largely a local business, reflecting the limits placed by the states on intra- and interstate branching. At year-end 1977, 20 states allowed statewide branching, and the remaining 30 states placed limits on intrastate However, as the benefits of geo- graphic diversification became better understood, many states began to lift the legal constraints on branching. By mid-1986, 26 states allowed statewide branch banking, while only 9 restricted banks to a unit banking business. By 2002, only 4 states placed any limits on Inter- state banking, which was just beginning in the early 1980s, generally required separately capital- ized banks to be established within a. | Improved Measures of Commercial Banking Improved measures of commercial banking output and productivity New comprehensive measures of commercial banking output and productivity more accurately reflect the changes that have occurred in the industry including deregulation advances in technology and the development of new banking services Sara E. Royster Sara E. Royster formerly an economist in the Office of Productivity and Technology is an economist in the Office of Occupational Statistics and Employment Projections Bureau of Labor Statistics. Email royster. sara@. The services that commercial banks offer have changed greatly since the 1980s because of deregulation the expansion of information technology and innovations in the types of services offered. Traditionally commercial banks primary services included facilitating transactions providing loans and safekeeping money and other valuables. However with the repeal of the regulatory limits of the Glass-Steagall Act banks began performing an increasing variety of functions including providing investment advice underwriting securities and writing insurance Deregulation allowed commercial banks to hold riskier financial assets on their balance sheets and to merge with investment banks. As a result banks expanded the types of services they offered and the fees from these services became a larger share of bank revenue. Commercial banks took advantage of the lower reserve requirements for investment banks which allowed them to take on more debt and potentially earn higher profits. Deregulation also removed the prohibition on interstate banking allowing commercial banks to operate freely across state lines. Increased competition because of deregulation caused a number of bank failures and triggered a series of mergers and acquisitions. Banks benefited from economies of scale as bank mergers resulted in larger and fewer banks. In addition larger banks began merging with smaller local banks thereby gaining