Does the United Kingdom have regional banking markets? An assessment of UK deposit provision 1992-2006

This study examines whether geographical differences in deposit interest rate setting persists in a bank market with national bank branching. As most UK retail banks have located their branch networks in different combinations within the regions and nations of the United Kingdom, the availability of banking services across the United Kingdom differs. This study examines whether this uneven dispersion of bank branching is associated with deposit account interest rate setting by UK banks over the sample period 1992 to 2006. While banks with branch networks predominately located in certain regions set deposit interest rates at different levels, the degree of overlap between bank branch networks is not a significant factor in deposit interest rate setting. These findings have importance for the definition of banking markets in competition assessments and future assessments of interest rate setting within international banking markets where bank branching restrictions have been lifted.