The Changing Geography of the U.S. Banking Industry

The U.S. commercial banking industry provides a unique laboratory for studying the effects of regulatory and technological change on the geography of urban economic activity. We explore whether and how three fundamental facets of banking geography changed during the 1990s: bank headquarters locations, bank branch office locations, and bank depositor locations. We find that (a) mergers and acquisitions have allowed large publicly-traded banks to move their company headquarters from smaller cities to larger cities, consistent with the existence of agglomeration economies available to banking companies, (b) bank branches have moved substantially farther away from bank headquarters, evidence that banking organizations have become less geographically centralized, but (c), despite these and other strategic changes by banks, the spatial density of bank deposits in the 50 largest metropolitan areas has remained remarkably stable over time