The Effect of Common Ownership on Profits: Evidence from the U.S. Banking Industry

In recent years, large asset managers and other institutional investors have come to own increasingly large shares of firms that are competitors. For instance, BlackRock owns shares of both Bank of America and JPMorgan Chase. Such common ownership is prevalent in many industries. For example, the graph below illustrates the prevalence of common ownership in the U.S. banking industry. It shows the ownership stakes by the five largest bank shareholders in seven of the largest U.S. banks, and in all public banks combined:

Figure 1 Ownership stakes by the five largest bank shareholders in seven of the largest U.S. banks, Read more