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Reserve Board have recently developed a new, comprehensive
database to use in studying the direct impact of mergers on
the growth of branches and their locations.29 Using de-
tailed data from 1975 to 1995 that classify branches by pos-
tal ZIP codes, they find that mergers involving little over-
lap of branches in the same ZIP codes do not reduce the num-
ber of branches per capita.
More striking is the finding that the effect of mergers
on branching does not vary with average income in the ZIP
code: the impact of mergers on the number of branches per
capita in poor neighborhoods is the same as in wealthy
neighborhoods. That evidence is inconsistent with the con-
cern that after mergers banks tend to increase service to
relatively affluent areas in comparison with lower income
areas.
In fact, mergers of the type we have seen recently pro-
vide consumers with far more convenience. Customers who
have family members in different states will find that they
can now use the same bank to service all family members.
Setting up a joint account for family members in different
states and transferring funds among separate family members'
accounts is much simplified. A single phone call or visit
to the local branch will replace the process of writing a
check, mailing it, waiting for the check to arrive, deposit-
ing it, and waiting again for the check to clear. Having a
bank with regionwide and nationwide offices can thus save
consumers both time and money.
International Context
The expansion of bank powers and banking networks
through mergers also should be considered in an internation-
al context. Concerning bank powers, all of the European
Union members and G-10 countries except the United States
permit commercial banks to underwrite and deal in private
securities.30 All but four of these countries (Belgium,
Canada, Greece, and Japan) permit banks to conduct securi-
ties activities directly; the four other countries require
some type of subsidiary structure, similar to the section 20
subsidiaries that have been permitted in the United States
during the past decade. Most developed countries thus give
banks great flexibility in choosing the type of corporate
form best suited for their involvement in the securities
business.
The mergers occurring in the United States may not be
as "mega" as it might seem when they are considered in an