Regulation, Competition, and Technology: The Restructuring of the US Commercial Banking System

The impact on the US commercial banking system of government regulation, of increased competition from other financial services sectors, and of new technology is examined in this paper. The banking industry is responding by creating the semblance of an interstate banking system through merger and acquisition. Multibank holding companies have forged regional banking organisations despite federal prohibitions. A model of the bank merger process is presented. In the spatial context, the possible consequences of this merger process include reduction in the number of banks and branch offices, migration of banking functions up the urban hierarchy, and outflow of funds from small cities and rural areas towards regionally important cities and the international market.