The dramatic reduction in the growth rate of bank lending associated with the 1990-91 recession, particularly in New England, has evoked claims by many observers of a credit crunch. However, because of the difficulty in determining whether the observed slow credit growth is a demand or supply...

The recent relaxation of restrictions on interstate banking and branching, as well as the likely relaxation of Glass-Steagall restrictions, should encourage significant consolidation in the banking industry. Larger lenders, diversified across regions and products, will undoubtedly be less...