Technological Progress and the Geographic Expansion of the Banking Industry

42 Pages Posted: 29 Jul 2002

See all articles by Allen N. Berger

Allen N. Berger

University of South Carolina - Darla Moore School of Business; Wharton Financial Institutions Center; European Banking Center

Robert DeYoung

University of Kansas School of Business

Date Written: June 2002

Abstract

We test some predictions about the effects of technological progress on geographic expansion using data on banks in U.S. multibank holding companies over 1985-1998. Specifically, we test whether over time (a) parental control over affiliate banks has increased, and (b) the agency costs associated with distance from the parent have decreased. The data suggest that banking organizations exercise significant control over affiliates that has been increasing over time, and that the agency costs associated with distance have decreased somewhat over time. The findings are consistent with the hypothesis that technological progress has facilitated the geographic expansion of the banking industry.

Keywords: Banks, efficiency, mergers, productivity, technological progress

JEL Classification: G21, G28, G34, L11

Suggested Citation

Berger, Allen N. and DeYoung, Robert, Technological Progress and the Geographic Expansion of the Banking Industry (June 2002). FEDS Discussion Paper No. 2002-31; FRB Chicago Working Paper No. 2002-07. Available at SSRN: https://ssrn.com/abstract=318703 or http://dx.doi.org/10.2139/ssrn.318703

Allen N. Berger (Contact Author)

University of South Carolina - Darla Moore School of Business ( email )

1705 College St
Francis M. Hipp Building
Columbia, SC 29208
United States
803-576-8440 (Phone)
803-777-6876 (Fax)

Wharton Financial Institutions Center

Philadelphia, PA 19104-6367
United States

European Banking Center

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Robert DeYoung

University of Kansas School of Business ( email )

Capitol Federal Hall
1654 Naismith Drive
Lawrence, KS 66045
United States
785-864-1806 (Phone)

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