Reassessing the Strength of Industrial Banks: Evidence, Trends, and Policy Implications
A new report from the Utah Center for Financial Services at the David Eccles School of Business at the University of Utah finds that industrial banks (IB) occupy a distinctive niche in the U.S. banking system. IBs have business models that lead them to decrease market concentration and enable them to increase product innovation. Their market segments focus on specialized and underserved segments, often using information advantages from their parent company. The report finds little evidence that restrictions on commercial ownership would deliver stability benefits, but that they could increase compliance and innovation costs.