Serving as the official blog of the Financial Services Forum, BankNotes is where our team analyzes and discusses the latest proposals, ideas, and news surrounding our eight member institutions, the U.S. financial sector, and the economy. Our goal is to provide thoughtful insights on the issues impacting the eight largest and most diversified U.S.-based financial institutions, as we promote policies that support savings and investment, deep and liquid capital markets, a competitive global marketplace, and a sound financial system.
Are big banks getting bigger? While some assert the answer is, “yes,” the facts are a bit more complicated and should be closely considered. In this post, we take a deeper dive into the facts on size and concentration in the banking industry. The facts reveal a picture of bank size and concentration that is both more interesting and more nuanced than the general claim that “big banks are getting bigger.”
The key takeaway is that large banks actually account for a smaller share of financial sector assets than they did a decade ago and the degree of concentration in the banking sector is not unusual relative to other important industries in the US.
Overall, the entire banking sector is growing. As seen in Figure 1, real assets in the banking industry have more than doubled from $9.1 trillion in 2000 to $18.8 trillion in 2018. The overall growth in the banking sector is a sign of the health and vitality of the U.S. economy: As the economy grows, so too do banks as they steward an increasing amount of savings.
Source: Federal Reserve Y9-C, New York Federal Reserve Quarterly Trends for Consolidated U.S. Banking Organizations
