US bank competition weaker than thought – St Louis Fed paper

Measuring off-balance sheet actives shows some banks have 10% more pricing power, says researcher

JP Morgan
JP Morgan: “level of competition might be less than previously thought”

Including off-balance sheet revenues in pricing power measures suggests competition in the US banking sector could be less than previously thought, according to a researcher from the Federal Reserve Bank of St Louis.

In an economic letter, David Wheelock assesses a measure that calculates the degree of a firm’s pricing power, called the Lerner Index. He develops the measure to include the revenues banks generate from off-balance sheet activities.

Using data from the 10 largest US banks from

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