Integration Among US Banks

We define and construct 'integration' for a large sample of 2287 US banks-measured by their level of exposure to common factors-during the period 1993-2019. Integration among US banks shows a steady increase and displays significantly high peaks during episodes of market distress such as the LTCM collapse, the Dotcom bust, the Great Recession and the Eurozone crisis. Regulatory intervention has improved US banks' capitalization, but it has not curtailed banks' exposure to common factors, which continues to rise unabated. Among characteristics associated with integration, we find that bank size is the most significant-both economically and statistically