Bank commercial loan markets and the role of market structure: evidence from surveys of commercial lending

This paper seeks to test two tenets that underlie the current practice of antitrust analysis in banking. The first is the view that bank commercial loan markets are local in nature, and the second is the view that banks in more concentrated markets are more likely to engage in some form of noncompetitive behavior. Tests of both of these tenets are conducted using an extensive set of loan-specific survey information not previously employed to address these issues. Results consistent with the existence of local banking markets and the dominance of competitive differences as an explanation for observed differences in loan rates are found.