Dodd-Frank and Competition

For John, BLUF:  Over regulation will eventually make us pseudo-socialist.  Nothing to see here; just move along.

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From "The Volokh Conspiracy" column in The Washington Post we have this item, "New study finds that Dodd-Frank has promoted industry consolidation and killed community banks"

A new study by Marshall Lux and Robert Greene reports that since the enactment of Dodd-Frank community banks have lost market share at twice the rate that they did prior to Dodd-Frank.

The authors note that many of the regulations implemented pursuant to Dodd-Frank are not linked to the size of the institution, thus there are economies of scale in regulatory compliance.  Thus, regulatory costs tend to fall proportionally heavier on smaller banks, which, in turn, tends to promote consolidation of the industry (as I noted several years ago when I predicted that Dodd-Frank would promote industry consolidation).

I am told that small banks are doing well in Lowell, but this study suggests Lowell may be an anomaly.

"Economies of scale."  This is why ever increasing government regulation hampers small business and impedes development of new businesses.

Have I mentioned the book The Other Patch recently?

Hat tip to the Instapundit.

Regards  —  Cliff