Competing for underwriting market share: The case of commercial banks and securities firms

This study analyzes changes in the underwriting market share of securities firms and commercial banks over a 20-year period that encompasses the deregulation period of 1989–1999. The study finds that, after controlling for firm combination effects, there is no evidence that commercial banks gained share at the expense of ranked traditional underwriters. There is strong evidence that market breadth helps both securities firms and commercial banks to gain market share, whereas greater share in the underwriting of a specific security has the opposite effect on next year's market share. There is supportive but limited evidence that high-volume years favor commercial banks, whereas low-volume years favor prestigious underwriters. The influence of firm-specific factors is limited to a few markets, which may explain the stickiness of underwriting market share of ranked firms over time.