World Library  
Flag as Inappropriate
Email this Article

Deposit market share

Article Id: WHEBN0001062686
Reproduction Date:

Title: Deposit market share  
Author: World Heritage Encyclopedia
Language: English
Subject: Banking, Dai-Ichi Kangyo Bank, Bank of America, JPMorgan Chase
Collection: Banking
Publisher: World Heritage Encyclopedia
Publication
Date:
 

Deposit market share

The deposit market share is a way of measuring the size and performance of a bank in the United States

Definition

In the simplest sense of the phrase, "deposit market share" is defined as the amount on deposit at a particular bank divided by the total amount on deposit at all banks. In practice however, the term "deposit market share" is used to refer to the deposit Federal Deposit Insurance Corporation (FDIC). The FDIC calculations do not include money deposited at credit unions, and the cash accounts at brokerage firms.

Importance of this metric

This metric is considered by many to be an important banking performance measure although many regard it as is misleading for the following reasons:

  • FDIC insured deposits have been for the past twenty years growing smaller and smaller as bank customers have elected to put their funds into stocks, bonds, mutual funds, and annuities. The amount in mutual funds is double the amount in bank accounts, the amount of money in Money Market Funds is the same as in checking accounts. These businesses are as profitable or even more so to the financial services company then normal bank accounts, so if customers are moving money from a particular bank's normal bank accounts to bank-owned mutual funds, the bank does not lose anything. If one was only looking at deposit market shares however, it would appear to shrink.
  • Deposit market share does not include credit unions.
  • Deposit market share gives no indication as to how many other financial products and services a particular bank's depositors might be buying from that bank. For example, Bank X might have a 10% deposit market share, yet if all those depositers simply have checking accounts and nothing else with that Bank, it would make nowhere near as much money as Bank Y in the same market, who might have 2% deposit market share yet successfully sell mutual funds, mortgages, and insurance.

Use in anti-trust proceedings

When two banks merge, a survey is done to ensure that the combined deposit market shares will be no larger than 25% in a particular state, or 10% nationally. If one or both of those percentages are higher than allowed, the banks can elect to still do the merger but they would need to divest (i.e. sell off branches and customer accounts) enough branches to get them within the guidelines.

This article was sourced from Creative Commons Attribution-ShareAlike License; additional terms may apply. World Heritage Encyclopedia content is assembled from numerous content providers, Open Access Publishing, and in compliance with The Fair Access to Science and Technology Research Act (FASTR), Wikimedia Foundation, Inc., Public Library of Science, The Encyclopedia of Life, Open Book Publishers (OBP), PubMed, U.S. National Library of Medicine, National Center for Biotechnology Information, U.S. National Library of Medicine, National Institutes of Health (NIH), U.S. Department of Health & Human Services, and USA.gov, which sources content from all federal, state, local, tribal, and territorial government publication portals (.gov, .mil, .edu). Funding for USA.gov and content contributors is made possible from the U.S. Congress, E-Government Act of 2002.
 
Crowd sourced content that is contributed to World Heritage Encyclopedia is peer reviewed and edited by our editorial staff to ensure quality scholarly research articles.
 
By using this site, you agree to the Terms of Use and Privacy Policy. World Heritage Encyclopedia™ is a registered trademark of the World Public Library Association, a non-profit organization.
 


Copyright © World Library Foundation. All rights reserved. eBooks from Project Gutenberg are sponsored by the World Library Foundation,
a 501c(4) Member's Support Non-Profit Organization, and is NOT affiliated with any governmental agency or department.