Country A has no restrictions on bank branching and banks are permitted to offer investment and insurance products along with traditional banking...

Country A has no restrictions on bank branching and banks are permitted to offer investment and insurance products along with traditional banking services. In Country B there are strict limits on branch banking and on the geographical spread of a bank"s business. In addition, banks in Country B are not permitted to offer investment or insurance services. A. In which country will the banking system be more concentrated? Country A is likely to have a more concentrated banking system, as fewer banks could service the entire country. In Country B, branching restrictions are likely to give rise to a large number of smaller banks. B. In which country will the banking system be more competitive? The experience in the United States with the McFadden Act would suggest that the banking system would be more competitive in Country A. Although banking restrictions are often intended to prevent concentration and monopoly power in the banking system, the outcome in the United States was a rang