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The Case for Regulatory Rent-Seeking: CRA Based Protests of Bank Mergers and Acquisitions

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  • Gramm, Marshall

Abstract

This paper addresses the question of regulatory rent seeking based on protests of proposed bank mergers and acquisitions submitted by community groups to bank regulators. Theories of CRA-related community group behavior based on benevolence and rent seeking, yield significantly different implications concerning the effect of a bank's CRA rating on protest probability, allowing for a clear test of the underlying motive for protest activity. The analysis shows: (1) protests impose significant time cost on merger and acquisition applications and (2) the benevolent-based theory must be rejected in favor of the rent-seeking theory. Copyright 2003 by Kluwer Academic Publishers

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  • Gramm, Marshall, 2003. "The Case for Regulatory Rent-Seeking: CRA Based Protests of Bank Mergers and Acquisitions," Public Choice, Springer, vol. 116(3-4), pages 367-379, September.
    • Handle: RePEc:kap:pubcho:v:116:y:2003:i:3-4:p:367-79
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    Cited by:

    1. Emanuele L. M. Bettinazzi & Maurizio Zollo, 2017. "Stakeholder Orientation and Acquisition Performance," Strategic Management Journal, Wiley Blackwell, vol. 38(12), pages 2465-2485, December.
    2. Michael Munger & Cameron Tilley, 2023. "Race, risk, and greed: Harold Black's contributions to the institutional economics of finance," Public Choice, Springer, vol. 197(3), pages 335-346, December.
    3. Terza, Joseph V. & Basu, Anirban & Rathouz, Paul J., 2008. "Two-stage residual inclusion estimation: Addressing endogeneity in health econometric modeling," Journal of Health Economics, Elsevier, vol. 27(3), pages 531-543, May.

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