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To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jbankfin.2008.07.018 Byline: Timothy H. Hannan, Robin A. Prager Keywords: Banks; Competition; Pricing Abstract: This paper examines the relationship between the profitability of small single-market banks and the presence in the market of large banking organizations and banking organizations that operate primarily outside of the local banking market. We find that, in rural banking markets, the profitability of small single-market banks is significantly related to the presence of both large and small primarily-out-of-market banks. We also find that an increased presence of large or small primarily-out-of-market banks in rural banking markets reduces the positive effect of an increase in concentration on small single-market bank profits. This finding is consistent with theoretical predictions reported in the recent literature and has important implications for antitrust policy. In urban banking markets, we find little evidence of any relationship between the profitability of small single-market banks and the presence of large or primarily-out-of-market banks. Author Affiliation: Board of Governors of the Federal Reserve System, Washington, DC 20551, United States Article History: Received 19 May 2008; Accepted 23 July 2008 Article Note: (footnote) [star] The views expressed in this paper are those of the authors and do not necessarily reflect the views of the Board of Governors or its staff.

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jbankfin.2005.11.007 Byline: Timothy H. Hannan Keywords: Banks; Fees; Competition Abstract: This paper reports a systematic examination of the determinants of deposit-related retail banking fees using a set of survey data that is unusual for its size, specificity, and sampling properties. The analysis focuses explicitly on six different fees associated with checking accounts and automated teller machine (ATM) usage. A preliminary analysis documents that, on average, multimarket banks charge substantially higher fees than do typically smaller, single-market banks. A more detailed econometric analysis yields results consistent with predictions of recent models. In particular, it finds that the greater the presence of multimarket banks in the local market, the higher are the retail deposit fees of single-market banks (except in highly concentrated markets) and the weaker is the positive relationship between those fees and market concentration. Author Affiliation: Federal Reserve Board, Financial Structure Section, Division of Research and Statistics, Washington, DC 20551, United States Article History: Received 3 December 2004; Accepted 14 November 2005 Article Note: (footnote) [star] The views expressed herein are those of the author and do not necessarily reflect the views of the Board of Governors of the Federal Reserve System or its staff. The author would like to thank in particular Moebs Services and Mark Fusaro for providing the fee data used in this study. Thanks are also due to Robin Prager, George Pennacchi, James McAndrews, Ron Borzekowski, Mark Fusaro, and Michael Moebs for valuable comments, as well as to David Kite for excellent research assistance.

The local banks operating in the limited geographical areas are assessed for their behavior in determining interest rates in the event of competition from the multi locational, large banks. The large banks are in general, tend to offer lower interest rates on deposits compared to the local banks to keep uniformity over its areas of operation.

Four approaches were used to distinguish the benefits and limitations of three theories of such relationship between bank performance and market structure. Results showed support of the structure-conduct-performance theory, nonsupportive of the relative market power theory and supportive only of several conditions for the efficient-structure theory. The relationships have to be further evaluated since none of the data are completely consistent with prices, profits, market structure and efficiency relationships.