The Effects of Bank Mergers and Acquisitions on Small Business Lending
Allen N. Berger
University of South Carolina - Darla Moore School of Business; Wharton Financial Institutions Center; European Banking Center
New York University - Leonard N. Stern School of Business
Gregory F. Udell
Indiana University - Kelley School of Business - Department of Finance
Joseph M. Scalise
University of Pennsylvania, Wharton School; Bain & Company
Journal of Financial Economics, Vol. 50, November 1998
This paper examines the effects of over 6,000 recent U.S. bank mergers and acquisitions (M&As) on small business lending. It is the first to decompose the impact of M&As into static effects from simply combining the institutions into a pro forma larger organization, and dynamic effects associated with post-M&A refocusing of the consolidated institution. It is also the first to estimate the external effect -- the dynamic reactions of other local banks. It is found that the static effects of M&As tend to reduce small business lending, but are mostly offset by the reactions of other banks, and in some cases also by refocusing efforts of the consolidating institutions themselves.
Note: This is a description of the article and is not the actual abstract.
Date posted: November 12, 1998