This paper investigated what effects market characteristics in regional financial markets have on the performance of regional banks (first-tier and second-tier regional banks). Specifically, we examined whether the deposit rates of regional banks are affected by market characteristics, that is, the market concentration ratio, local market shares of credit association deposits and postal savings (now Japan Post Bank), respectively, local wealth, and local economic activity, by analyzing data from 1995, 2000 and 2007. Our study demonstrated that a larger presence of credit associations in the regional market led to higher deposit rates for regional banks in 1995, but that this tendency has not been seen recently. We also found that a larger share of postal savings leads to lower deposit rates of regional banks, so it can be said that regional banks do not compete with postal savings at least in setting deposit rates. The fact that, more recently, independent variables for market characteristics except for the local market share of postal savings have had no influence on the deposit rates of regional banks indicate the possibility that segmented regional financial markets tend to be unified within a single market.