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since they can now deal with their home institution wherever

their travels take them and continue to enjoy the discount

for using their own bank's services.

Effects on the Availability of Services through Branches

Another issue of interest is the impact that bank con-

solidation will have on the availability of services through

branches.  As Figure 1 clearly shows, branch networks have

been growing despite the reduction in the number of banks

during the last decade.  Since 1985 the number of banking

organizations has declined by nearly one-third, primarily

through mergers, to just over 9,000.  The number of bank

branches, however, has increased by one-third, to nearly

58,000.  In addition, the number of ATMs also has risen rap-

idly to exceed 125,000 in the United States, and ATMs have

also been spreading internationally.28  Banking by phone and

electronically has also increased.  Consumer options have

thus been increasing, not decreasing, with bank consolida-

tion.

Consumer and community advocates raise questions about

the effect of mergers not just on the number of branches but

also on the location of branches.  Economists at the Federal

Figure 1

Bank Consolidation and Branch Networks in the United States, 1985-96

15000

58000

13500

54000

12000

50000

10500

46000

Banks

Branches

9000

42000

1985

1986

1987 1988

1989

1990

1991

1992

1993 1994

1995

1996

Year

Sources: Federal Deposit Insurance Corporation and Federal Reserve Board.