Have acquisitions of failed banks increased the concentration of U.S. banking markets?
Abstract
During 2007-10, failures eliminated 318 U.S. commercial banks and savings institutions, about 4 percent of the total number of banks operating at the end of 2006. The assets and deposits of many failed banks were acquired by institutions that already had offices in markets served by the failed banks. This article investigates the impact of in-market acquisitions of failed banks on the concentration of local U.S. banking markets. Most banks that failed during 2007-10 were small, and their acquisitions generally had little impact on market concentration. Acquisitions of larger banks that failed, such as the acquisition of Washington Mutual Bank by JPMorgan Chase Bank, also had only limited impact on the concentration of most banking markets. Among large metropolitan statistical area markets, the Houston and New York City banking markets were most affected by the acquisition of Washington Mutual, but these markets remained relatively unconcentrated after the acquisition. Hence, the article finds that except for a few rural banking markets, acquisitions of failed banks by in-market competitors generally had only a small impact on market concentration.Download Info
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Article provided by Federal Reserve Bank of St. Louis in its journal Review.
Volume (Year): (2011)
Issue (Month): May ()
Pages: 155-168
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Keywords: Bank failures ; Bank mergers ; Banking market;References
References listed on IDEASPlease report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Craig P. Aubuchon & David C. Wheelock, 2010. "The geographic distribution and characteristics of U.S. bank failures, 2007-2010: do bank failures still reflect local economic conditions?," Review, Federal Reserve Bank of St. Louis, issue Sep, pages 395-415.
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