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Bank Asset Concentration Not Necessarily Cause for Worry

Ricardo T. Fernholz and Christoffer Koch

Abstract: U.S. banking assets have become substantially more concentrated within a few large institutions. However, decreasing relative rates of big-bank growth and of idiosyncratic volatility—an indicator of individual bank susceptibility to shocks and a resulting redistribution of assets—suggest a reduction in systemic financial system risk through contagion.

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