U.S. commercial bank performance and deregulation (1980-1990).

Summary In order to restore their profitability, the U.S. Congress removed some of the remaining restrictions on the activities of commercial banks. This deregulation in the 1980s changed the structure of banks' balance sheets in terms of deposit taking and product and service offerings. This new financial environment allowed well-managed institutions to adapt and improve their performance. Banks that did not implement consistent strategies failed in large numbers, while others were absorbed by competitors, marking the beginning of a gradual consolidation of the U.S. commercial banking industry in particular and the financial services industry in general. During the decade under review, there was an overall decline in the performance of commercial banks regardless of their size or location. The U.S. financial services industry is slowly transforming and the full impact of deregulation on commercial bank performance has yet to be seen.