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).

The study has lots of interesting data on the industry patterns of lending by various types of banks as well, most notably that large banks tend to make fewer agricultural loans than community banks.