It has been argued that underpriced federal deposit insurance provides incentive for insured institutions to increase the value of shareholder equity by expanding into activities that shift risk onto the deposit insurer. Derivative instruments have been used by firms to change their risk...

Two hypotheses are tested in this paper. The first is whether the appropriate geographic market for certain banking services is national, instead of local. The second is whether the definition of banking "product" as all banking services is too broad. Copyright 1992 by MIT Press.