Bank consolidation and small business lending: it's not just bank size that matters
AbstractConcern with the potential effect of bank mergers on small business lending has stemmed from a belief that larger acquirers may be less willing than their smaller targets to be active in the small business lending market. However, we find that in roughly half the commercial and savings bank mergers of the past three years, the acquirer has a larger portfolio share of small business loans than its target; moreover, the most common acquirer of small banks is another small bank. The empirical results support the hypothesis that acquirers tend to recast the target in their own image, causing small business loan portfolio shares of the consolidated bank to converge toward the pre-merger portfolio share of the acquirer. Since acquirers are almost as likely to have larger as smaller shares of small business loans in their portfolios, compared to their targets, this suggests that not all mergers will shrink small business lending; many will actually increase it.
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Bibliographic InfoPaper provided by Federal Reserve Bank of Boston in its series Working Papers with number 97-1.
Date of creation: 1997
Date of revision:
Publication status: Published in Journal of Banking and Finance, vol. 22, nos. 6-8 (August 1998), pp. 799-820.
Other versions of this item:
- Peek, Joe & Rosengren, Eric S., 1998. "Bank consolidation and small business lending: It's not just bank size that matters," Journal of Banking & Finance, Elsevier, vol. 22(6-8), pages 799-819, August.
Please 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.:
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New York University, Leonard N. Stern School Finance Department Working Paper Seires
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- Allen N. Berger & Anthony Saunders & Joseph M. Scalise & Gregory F. Udell, 1997. "The Effects of Bank Mergers and Acquisitions on Small Business Lending," New York University, Leonard N. Stern School Finance Department Working Paper Seires 97-1, New York University, Leonard N. Stern School of Business-.
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