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Independent Commercial Bank Mergers and Agricultural Lending Concentration

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  • Ahrendsen, Bruce L.
  • Dixon, Bruce L.
  • Lee, LaDerrek T.

Abstract

In an era of rapid consolidation in banking, the effect of mergers on the availability of credit to agricultural businesses is unclear. Commercial bank mergers have profoundly altered the urban credit marketplace and are positioned to do the same for the agricultural credit marketplace. Adjustment models are estimated with data on independent bank consolidations from 1988 through 1995. The regression results bode well for agricultural lending if acquiring banks have larger concentrations of assets in agriculture than acquired banks. Conversely, if acquiring banks have smaller concentrations than acquired banks, acquisitions have a negative impact on agricultural lending. Since most acquiring banks have smaller agricultural loan concentrations than acquired banks, there is concern for agricultural lending. However, other lenders are likely to fill credit gaps that develop.

Suggested Citation

  • Ahrendsen, Bruce L. & Dixon, Bruce L. & Lee, LaDerrek T., 1999. "Independent Commercial Bank Mergers and Agricultural Lending Concentration," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 31(2), pages 215-227, August.
    • Handle: RePEc:cup:jagaec:v:31:y:1999:i:02:p:215-227_00
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    References listed on IDEAS

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    1. Ahrendsen, Bruce L. & Dixon, Bruce L. & Priyanti, Atien, 1994. "Growth in Agricultural Loan Market Share for Arkansas Commercial Banks," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 26(2), pages 430-442, December.
    2. Allen M. Featherstone, 1996. "Post-Acquisition Performance of Rural Banks," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(3), pages 728-733.
    3. Joe Peek & Eric Rosengren, 1995. "Small business credit availability: how important is size of lender?," Working Papers 95-5, Federal Reserve Bank of Boston.
    4. R. Alton Gilbert & Michael T. Belongia, 1988. "The Effects of Affiliation with Large Bank Holding Companies on Commercial Bank Lending to Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(1), pages 69-78.
    5. Philip E. Strahan & James Weston, 1996. "Small business lending and bank consolidation: is there cause for concern?," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 2(Mar).
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    1. Ahrendsen, Bruce L. & Dixon, Bruce L. & Luo, Bing, 2003. "The Effects Of Bank Mergers On Commercial Bank Agricultural Lending," 2003 Annual meeting, July 27-30, Montreal, Canada 22051, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Silvio Goglio & Yiorgos Alexopoulos, 2009. "Financial Deregulation and Economic Distress: Is There a Future for Financial Co-operatives?," Euricse Working Papers 09001, Euricse (European Research Institute on Cooperative and Social Enterprises).
    3. Alexopoulos, Yiorgos & Goglio, Silvio, 2011. "Financial Cooperatives: Problems and Challenges in the Post-Crisis Era," Journal of Rural Cooperation, Hebrew University, Center for Agricultural Economic Research, vol. 39(1), pages 1-14.
    4. Settlage, Latisha A. & Dixon, Bruce L. & Ahrendsen, Bruce L. & Koenig, Steven R., 2001. "Estimating Principal Outstanding Models For Farm Service Agency Guaranteed Loans," 2001 Annual meeting, August 5-8, Chicago, IL 20738, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Settlage, Latisha A. & Dixon, Bruce L. & Ahrendsen, Bruce L., 2000. "Factors Determining Fsa Guaranteed Loan Loss Claim Activity In The U.S. For 1990-1997," Staff Papers 15782, University of Arkansas, Department of Agricultural Economics and Agribusiness.
    6. Silvio Goglio & Yiorgos Alexopoulos, 2014. "Editorial: Cooperative Banks at a Turning Point?," Journal of Entrepreneurial and Organizational Diversity, European Research Institute on Cooperative and Social Enterprises, vol. 3(1), pages 1-8, June.
    7. Kevin N. Kim & Ani L. Katchova, 2022. "Agricultural bank acquisitions and postacquisition performance: An examination of the role of shared knowledge," Agribusiness, John Wiley & Sons, Ltd., vol. 38(4), pages 743-770, October.

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