Abstract
The objective of this paper is to determine whether commercial banks in the Southern Region of the United States are highly concentrated and hence less competitive in offering favorable lending terms to borrowers and subsequently hindering economic development in their region. The paper employs concentration measures to estimate the concentration degrees of commercial banks in the Southern Region of the United States in 2019. Data for deposits and loans plus leases of banks in 12 states in the South were collected for the year 2019 from the following sources: http://www.ofi.state.la.us/ and http://www.ibanknet.com/. Empirical results show that only commercial bank markets in Kentucky and Florida have perfect competition. The commercial banks in other ten states are either uncompetitive or less competitive, thereby creating adverse economic development environments for prospective corporate and individual borrowers in those states, and consequently impairing the profitability, stability and risk structure of the banking industry in most states covered in the Southern Region. The paper provides a value- added literature contribution to US banking market structure. The next step would be up to state and federal bank regulatory bodies to address the issue in those less competitive states and their potential on economic development in that region.
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