This article reexamines the conventional wisdom that commercial banking is in severe decline. A careful reading of the evidence does not support it. True, on-balance sheet assets held by commercial banks have declined as a share of total intermediary assets. But this measure ignores the...

This article argues that the poor performance of the U.S. banking industry in the 1980s was due mainly to the risk-taking of the largest banks, which was encouraged by the U.S. government's too-big-to-fail policy. The article documents the recent trend toward riskier bank portfolios and the...