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Real Output of Bank Services: What Counts is What Banks Do, Not What They Own


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We argue that models of banks as processors of information and transactions imply a quantity measure of bank output based on transaction counts instead of balances of loans and deposits. Compiling new and comparable real output measures for the USA and a range of European countries, we show that counts-based output series exhibit substantially different growth patterns than balances-based output series. Since the US official statistics rely on counts while European statistics rely on balances, this implies that comparisons of bank output growth between Europe and the USA are biased.

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