Evolution of competition in the post-deregulation period I’ll take as a starting point a snapshot of the aggregate balance sheet of the banking system in 1980 – just before the main sweep of financial deregulation got under way (Table 1). Banks’ balance sheets back then looked rather different from the way they do now.
Roughly speaking, the liabilities side of the balance sheet consisted of close to 90 per cent deposits. On the asset side, loans were around 60 per cent of the total, and much of the rest consisted of government securities, which were held under the “captive market” arrangements that were then in place.