The Dynamics of Market Entry: The Effects of Mergers and Acquisitions on Entry in the Banking Industry

Berger, Allen N.; Bonime, Seth D.; Goldberg, Lawrence G.; White, Lawrence J.

doi:10.2139/ssrn.186009

Cited by 70 publications

(56 citation statements)

References 34 publications

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“…Related studies suggest that it takes several years for 7 De novo banks tend to lend proportionately more to small businesses than mature small banks (DeYoung, Goldberg, and White, 1998); thus, they represent an interesting aspect of a market's competitive structure. Several studies have found that consolidation activity is positively related to market entry by de novo banks (Berger et al, 2000;Keeton, 2000;and Seelig and Critchfield, 2003).…”

Section: Methodology and Datamentioning

confidence: 99%

Bank Consolidation and Small Business Lending: The Role of Community Banks

Avery

Samolyk

2004

Journal of Financial Services Research

100

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Section: Methodology and Datamentioning

confidence: 99%

Bank Consolidation and Small Business Lending: The Role of Community Banks

Avery

Samolyk

2004

Journal of Financial Services Research

100

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“…Second, the newly merged entity closes "overlapping branches" to cut costs. Third, the larger bank created by the merger could encounter difficulties using and transmitting soft information, leading to a reduction in lending to soft information-dependent borrowers (Berger et al 2004). …”

Section: Empirical Setup Of the Merger Analysismentioning

confidence: 99%

“…Laurentian's branches in Ottawa were excluded from the sale, presumably due Ottawa's location near the border of Québec, and its economic connections to Québec communities. any reduction of lending by the merged entity can prompt its competitors to increase their lending and/or to open new branches (Berger et al (2004) and Damar (2007)). If the remaining incumbents increase their lending without opening new branches, then their overall soft information capture in the affected markets may fall and bankruptcies may rise.…”

Section: Empirical Setup Of the Merger Analysismentioning

confidence: 99%

Consumer Bankruptcy and Information

2012

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We analyze the relationship between the intensity of banks' use of soft-information and household bankruptcy patterns. Using a unique data set on the universe of Canadian household bankruptcies, we document that bankruptcy rates are higher in markets where the collection of soft, or qualitative locally gathered information, is the weakest. Using two Canadian bank mergers as exogenous variation in local market structure, we show that the differences in bankruptcy rates are not due to changes in the supply of credit. Our findings indicate that screening via hard-information is not a perfect substitute for softinformation. Instead, the two appear to be complements. JEL classification: G2, D4 Bank classification: Financial institutions; Financial services RésuméLes auteurs analysent la relation qu'il y a entre l'intensité avec laquelle les banques exploitent des données subjectives ou « informelles » et les tendances entourant les faillites de ménages. À partir d'un ensemble unique de données sur les faillites de ménages canadiens, ils confirment que les taux de faillite sont plus élevés dans les marchés où il se recueille le moins d'informations subjectives, c.-à-d. de renseignements qualitatifs obtenus par les succursales. En traitant deux fusions de banques canadiennes comme des facteurs de variation exogènes de la structure d'un marché local, les auteurs montrent que les différences entre les taux de faillite ne sont pas causées par des modifications de l'offre de crédit. Leurs résultats indiquent que les données objectives utilisées pour la sélection des emprunteurs ne constituent pas de substituts parfaits des données subjectives : en réalité, les deux types d'informations s'avèrent complémentaires.

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“…Mergers often resulted in negative deposit growth for the consolidated institutions or smaller growth than non-merging competitors, with depositors potentially leaving due to higher fees and lesser service as measured by employees per branch (DiSalvo 2002). M&As are also associated with increased frequencies of new bank charters in the same local market, as new banks presumably form in part to capture some of the runoff of retail loans and/or deposits (Berger, Bonime, Goldberg, White 2004).…”

Section: Bank Size and Performancementioning

confidence: 99%

The Effects of Competition from Large, Multimarket Firms on the Performance of Small, Single-Market Firms: Evidence from the Banking Industry

et al. 2005

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We offer and test two competing hypotheses for the consolidation trend in banking using U.S. banking industry data over the period [1982][1983][1984][1985][1986][1987][1988][1989][1990][1991][1992][1993][1994][1995][1996][1997][1998][1999][2000]. Under the efficiency hypothesis, technological progress improved the performance of large, multimarket firms relative to small, single-market firms, whereas under the hubris hypothesis, consolidation was largely driven by corporate hubris. Our results are consistent with an empirical dominance of the efficiency hypothesis over the hubris hypothesis -on net, technological progress allowed large, multimarket banks to compete more effectively against small, single-market banks in the 1990s than in the 1980s. We also isolate the extent to which technological progress occurred through scale versus geographic effects and how they affected the performance of small, single-market banks through revenues versus costs. The results may shed light as well on some of the research and policy issues related to community banking, and on the question of how community banks should be defined. JEL Classification Numbers: G21, G28, L11, O33

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The Dynamics of Market Entry: The Effects of Mergers and Acquisitions on Entry in the Banking Industry

Cited by 70 publications

References 34 publications

Bank Consolidation and Small Business Lending: The Role of Community Banks

Bank Consolidation and Small Business Lending: The Role of Community Banks

Consumer Bankruptcy and Information

The Effects of Competition from Large, Multimarket Firms on the Performance of Small, Single-Market Firms: Evidence from the Banking Industry

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