Efficient Banking under Interstate Branching
研究1997年美国允许国民银行跨州设立分行后，地理多元化如何改善银行的风险收益权衡，并分析银行可能因此选择更高风险以换取更高利润。
Nationally chartered banks will be allowed to branch across state lines beginning June 1, 1997.Whether they will depends on their assessment of the profitability of such a delivery system for their services and on their preferences regarding risk and return.We investigate the probable effect of interstate branching on banks' risk-return tradeoff, accounting for the endogeneity of deposit volatility.If interstate branching improves the risk-return tradeoff banks face, then banks that branch across state lines may choose a higher level of risk in return for higher profits.We find efficiency gains due to geographic diversity. EFFICIENT BANKING UNDER INTERSTATE BRANCHINGThe Interstate Banking Efficiency Act of 1994 allows nationally chartered banks to branch across state lines beginning June 1, 1997.Whether banks take advantage of this new ability to branch will depend on their assessment of the profitability of such a delivery system for their services.It will also depend on their preferences regarding risk and return.Interstate branching can lead to a reduction in the price of controlling liquidity risk because it allows the bank to more fully geographically diversify its deposit gathering.Similarly, geographical diversity may also lower the volatility of returns on a bank's loan portfolio.If these diversification effects exist, then geographic diversification improves the bank's risk-return opportunity set.This effectively lowers the cost, in terms of risk, of engaging in activities that generate higher profits.These profitable activities are likely to include the substitution of loans for securities in the bank's portfolio.Hence, on balance, it is not clear what the impact of geographic diversification will be on the riskiness (i.e., volatility of returns) of the bank.Interestingly, previous studies that have looked at bank risk have not found that it is lower for banks that are more fully geographically diversified.This seems perplexing until one accounts for the fact that risk is endogenous-the bank chooses its level of risk.Depending on the bank's risk preferences, interstate branching might lead to a higher level of risk-taking by banks, since it improves the risk-return tradeoff (i.e., lowers the price of risk), but also to a higher level of profitability. GEOGRAPHIC DIVERSIFICATION AND BANK EFFICIENCY A. Geographic Diversification and the Price of RiskDeposit volatility contributes to liquidity risk and increases the cost of risk management.Liquid assets are the first line of defense against liquidity risk.Hence, a higher degree of liquidity risk requires that a higher proportion of assets be held in securities.The cost of managing this risk includes the interest differential between loans and securities that is sacrificed when the loan-to-asset ratio must be reduced to accommodate a higher degree of liquidity risk.In principle, liquidity risk can be reduced when the deposit base is diversified.Greater diversification can be achieved by increasing the number of deposit accounts, given the branching ' 0 Mp Mm ' 1 .