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Explaining U.S. Commercial Bank Births, Deaths, and Marriages

Author

Listed:
  • Yongil Jeon

    (Central Michigan University)

  • Stephen M. Miller

    (University of Nevada and University of Connecticut)

Abstract

The last twenty years of the twentieth century witnessed regulatory change not seen since the Great Depression. That regulatory change, culminating with the Interstate Banking and Branching Efficiency Act of 1994, produced a significant consolidation within the banking industry, resulting from mergers and failures, that accelerated near the end of the century. Unlike the mergers and failures, the large numbers of new entrants did not receive the same attention. Nonetheless, the new entrants tempered the decline in the overall number of banking institutions. This paper examines correlates with the number of bank new-charters, failures, and mergers during the 1980s and 1990s. We employ the fixed- and random-effect regression technique -- employing a normal, Poisson, and negative binomial distributions. Among the results, we find that increases in the number of branches relative to the number of banks significantly associate with fewer new charters (births) and more mergers (marriages). Interestingly, increasing the number of offices (banks plus branches) significantly associates with more deaths (failures).

Suggested Citation

  • Yongil Jeon & Stephen M. Miller, 2002. "Explaining U.S. Commercial Bank Births, Deaths, and Marriages," Working papers 2002-27, University of Connecticut, Department of Economics.
    • Handle: RePEc:uct:uconnp:2002-27
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    References listed on IDEAS

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    1. Cebula, Richard, 1993. "The Regional Distribution of Bank Closings in the United States: An Extension of the Amos Analysis," MPRA Paper 51488, University Library of Munich, Germany.
    2. Stephen M. Miller & Yongil Jeon, 2003. "Deregulation and Structural Change in the U.S. Commercial Banking Industry," Eastern Economic Journal, Eastern Economic Association, vol. 29(3), pages 391-414, Summer.
    3. Robert DeYoung, 1999. "Birth, growth, and life or death of newly chartered banks," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 23(Q III), pages 18-35.
    4. Richard Cebula & Michael Toma, 2006. "Determinants of Geographic Differentials in the Voter Participation Rate," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 34(1), pages 33-40, March.
    5. Randall S. Kroszner & Philip E. Strahan, 1999. "What Drives Deregulation? Economics and Politics of the Relaxation of Bank Branching Restrictions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(4), pages 1437-1467.
    6. Yongil Jeon & Stephen M. Miller, 2002. "Has Deregulation Affected Births, Deaths, and Marriages in the U.S. Commercial Banking Industry?," Working papers 2002-26, University of Connecticut, Department of Economics.
    7. Kane, Edward J, 1996. "De Jure Interstate Banking: Why Only Now?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(2), pages 141-161, May.
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    More about this item

    Keywords

    commercial banks; new charters; failures; mergers;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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