The Effects of Bank Mergers and Acquisitions on Small Business Lending

Board of Governors of the Federal Reserve System Finance and Economics Discussion Series No. 1997-28

56 Pages Posted: 26 Nov 1997  

Allen N. Berger

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

Anthony Saunders

New York University - Leonard N. Stern School of Business

Joseph M. Scalise

University of Pennsylvania, Wharton School; Bain & Company

Gregory F. Udell

Indiana University - Kelley School of Business - Department of Finance

Date Written: May 1997

Abstract

We examine the effects of bank M&As on small business lending. Our methodology permits empirical analysis of the great majority of U.S. bank M&As since the late 1970s -- over 6,000 M&As involving over 10,000 banks (some active banks are counted multiple times). We are the first to decompose the impact of M&As on small business lending into static effects associated with a simple melding of the antecedent institutions and dynamic effects
associated with post-M&A refocusing of the consolidated institution. We are also the first to estimate the reactions of other banks in local markets to M&As. We find that the static effects of consolidation which reduce small business lending are mostly offset by the reactions of other banks in the market, and in some cases also by refocusing efforts of the consolidating
institutions themselves.

JEL Classification: G21, G28, G34, E58, L89

Suggested Citation

Berger, Allen N. and Saunders, Anthony and Scalise, Joseph M. and Udell, Gregory F., The Effects of Bank Mergers and Acquisitions on Small Business Lending (May 1997). Board of Governors of the Federal Reserve System Finance and Economics Discussion Series No. 1997-28. Available at SSRN: https://ssrn.com/abstract=41964 or http://dx.doi.org/10.2139/ssrn.41964

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

Anthony Saunders

New York University - Leonard N. Stern School of Business ( email )

44 West 4th Street
9-190, MEC
New York, NY 10012-1126
United States
212-998-0711 (Phone)
212-995-4220 (Fax)

Joseph M. Scalise

Bain & Company

Two Copley Place
Boston, MA 02118

University of Pennsylvania, Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Gregory F. Udell

Indiana University - Kelley School of Business - Department of Finance ( email )

1309 E. 10th St.
Bloomington, IN 47405
United States

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