In this paper we examine whether banks owned by interstate multibank holding companies
coordinate their security gains and losses to manage their tax, earnings, and capital management objectives.
To contribute to this discussion, we contrast 1994 data of the consolidated entities of multibank holding companies with that of independent banks with branches.
In fact, 90 percent of the 334 multibank holding companies in our subsamples operated with more than one branch.
(49) The magnitude of the development of the MBHC form of organization from 1956-1973, but especially from 1965-1973, is shown by Boczar, The Growth of Multibank Holding Companies
: 1956-1973 (Staff Economic Studies No.
Among banking organizations, multibank holding companies gained deposit share while independent banks and one-bank holding companies lost share.
Multibank holding companies had the greatest absolute increase in size over the ten years and the third largest percentage increase among all types of depository institutions, behind credit unions and independent banks.
I would guess that full interstate banking via branching would reduce the number of banking organizations only somewhat further because the staff study had already assumed interstate operations through the more expensive option of using multibank holding companies
(1) The Bank Holding Company Act of 1956 Although the Glass-Steagall Act of 1933 made some provision for the regulation of multibank holding companies, the opponents of holding companies pressed for more restrictions.
Restrictions on the nonbank activities of multibank holding companies were based on several factors besides the concern with economic concentration.
The number of multibank holding companies continued to grow, however.
The easing of restrictions on the intrastate expansion of multibank holding companies permits banking organizations to expand statewide by chartering separate banks under one holding company.
Most of the decline in the number of banking organizations came about through acquisitions by multibank holding companies. Such acquisitions enabled these companies to double the number of banks under their control from 2,296 in 1976 to 4,465 in 1987 and contributed to a dramatic decrease of 59 percent in the number of independent banks (table 2)(6).