The future viability of the US community banking sector - populated by small firms that hold a shrinking share of an increasingly competitive and technology-based financial services industry - is analysed by Federal Reserve Bank of Chicago economists Robert DeYoung and Denise Duffy.
The authors use numerous first-hand observations made by individual community bankers, collected during a Federal Reserve survey in August 2001, to complement the usual data-intensive industry analysis.
Although the survey itself was an effort to learn about the evolving payments services needs of community banks, the surveyed bankers also made wide-ranging observations on a variety of other topics, including the fundamental mission of community banks; the threats and opportunities posed by large banks; perceptions that the playing field is not always level; and the growing tension between traditional high-touch relationship banking and potentially more efficient high-tech banking.
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