Where the Leverage Sits in US Banking: An Olley–Pakes Decomposition of the Aggregate Equity Ratio of 4,198 Insured Institutions, June 2026, with Quantile Regressions on Size and a DuPont Split of Returns

The aggregate equity-to-assets ratio of the US banking system on 30 June 2026 was 9.910% (FDIC BankFind data, 4,198 active insured institutions with usable balance sheets). The typical bank is better capitalised: the unweighted mean ratio is 11.974% and the median 10.560%. I prove the Olley–Pakes identity that the aggregate ratio equals the unweighted mean plus n times the covariance between asset shares and equity ratios, and estimate the covariance term at −2.065 points; excluding 35 institutions with ratios above 50%, it is −1.515 points. The 18 institutions with assets above 250 billion USD hold 64.0% of assets with an asset-weighted ratio of 9.28%, against 11.26% for banks of 0.1 to 1 billion USD. Quantile regressions show that size compresses the upper tail rather than the lower: the slope of the equity ratio on log assets is −0.641 points at the 90th percentile, −0.141 at the median and an insignificant 0.057 at the 10th percentile. By the DuPont identity, the aggregate return on equity of 13.02% equals a return on assets of 1.290% times leverage of 10.09; small banks earn less on equity mainly because they hold more capital. Banks with equity below 9% of assets are 24.2% of institutions but hold 46.7% of assets.