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De Novo Bank Exit

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  • DeYoung, Robert
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    Abstract

    Newly chartered banks provide an additional credit source for small businesses, but the staying power of new banks can be weak. A multi-state exit model is estimated for U.S. commercial banks chartered between 1980 and 1985 and for a benchmark sample of small established banks. The determinants of failure are similar for both samples, but new bank failure is more sensitive to adverse environmental conditions. The timing of new bank exit-by-failure follows a life-cycle pattern, but the timing of new bank exit-by-acquisition does not. There is mixed evidence on the efficacy of regulations aimed at reducing new bank fragility.

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    Bibliographic Info

    Article provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking.

    Volume (Year): 35 (2003)
    Issue (Month): 5 (October)
    Pages: 711-28

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    Handle: RePEc:mcb:jmoncb:v:35:y:2003:i:5:p:711-28

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    Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879

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    Cited by:
    1. Fiordelisi, Franco & Mare, Davide Salvatore, 2013. "Probability of default and efficiency in cooperative banking," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 26(C), pages 30-45.
    2. Gerhard Hambusch & Sherrill Shaffer, 2012. "Forecasting Bank Leverage," Working Paper Series 176, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
    3. Theoharry Grammatikos, & Nikolaos I. Papanikolaou, 2013. "What lies behind the (Too-Small-To-Survive) banks?," LSF Research Working Paper Series 13-12, Luxembourg School of Finance, University of Luxembourg.
    4. DeYoung, Robert, 2003. "The failure of new entrants in commercial banking markets: a split-population duration analysis," Review of Financial Economics, Elsevier, vol. 12(1), pages 7-33.
    5. David G. Mayes & Hanno Stremmel, 2014. "The Effectiveness of Capital Adequacy Measures in Predicting Bank Distress," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
    6. Sherrill Shaffer, 2010. "Reciprocal Brokered Deposits And Bank Risk," CAMA Working Papers 2010-15, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    7. Fungácová, Zuzana & Turk Ariss, Rima & Weill, Laurent, 2013. "Does excessive liquidity creation trigger bank failures?," BOFIT Discussion Papers 2/2013, Bank of Finland, Institute for Economies in Transition.
    8. Maghyereh, Aktham I. & Awartani, Basel, 2014. "Bank distress prediction: Empirical evidence from the Gulf Cooperation Council countries," Research in International Business and Finance, Elsevier, vol. 30(C), pages 126-147.
    9. Massimo Libertucci & Francesco Piersante, 2012. "Start-up banks’ default and the role of capital," Temi di discussione (Economic working papers) 890, Bank of Italy, Economic Research and International Relations Area.
    10. Sherrill Shaffer, 2012. "Bank Failure Risk: Different Now?," CAMA Working Papers 2012-23, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    11. Knaup, M. & Wagner, W.B., 2009. "A Market Based Measure of Credit Quality and Banks' Performance During the Subprime Crisis," Discussion Paper 2009-35 S, Tilburg University, Center for Economic Research.
    12. Ken Cyree & James Wansley, 2009. "Managerial Rationale for Entry and the Relation to Performance and Small-Business Lending," Journal of Financial Services Research, Springer, vol. 35(2), pages 119-139, April.
    13. Man K. Leung & Trevor Young & Michael K. Fung, 2008. "The entry and exit decisions of foreign banks in Hong Kong," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 29(6), pages 503-512.
    14. David VanHoose, 2013. "Implications of Shifting Retail Market Shares for Loan Monitoring in a Dominant-Bank Model," Scottish Journal of Political Economy, Scottish Economic Society, vol. 60(3), pages 291-316, 07.
    15. Ergungor, O. Emre, 2005. "The profitability of bank-borrower relationships," Journal of Financial Intermediation, Elsevier, vol. 14(4), pages 485-512, October.

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