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The Dynamics of Market Entry: The Effects of Mergers and Acquisitions on De Novo Entry and Small Business Lending in the Banking Industry

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Author Info
Allen N. Berger
Seth D. Bonime
Lawrence G. Goldberg
Lawrence J. White

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Abstract

We study the dynamics of market entry following mergers and acquisitions (M&As), and the behavior of recent entrants in supplying output that might be withdrawn by the consolidating firms. The data, drawn from the banking industry, suggest that M&As are associated with subsequent increases in the probability of entry. The estimates suggest that M&As explain more than 20% of entry in metropolitan markets, and more than 10% of entry in rural markets. Additional results suggest that bank age has a strong negative effect on the small business lending of small banks, but that M&As have little influence on this lending.

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Paper provided by Wharton School Center for Financial Institutions, University of Pennsylvania in its series Center for Financial Institutions Working Papers with number 00-12.

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Date of creation: Feb 2000
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Handle: RePEc:wop:pennin:00-12

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Related research
Keywords: Entry Barriers to Entry Bank Mergers Small Business

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Find related papers by JEL classification:
G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages
G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
L89 - Industrial Organization - - Industry Studies: Services - - - Other

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Full references

Cited by:
(explanations, 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.)

  1. Joanna Stavins, 2004. "Do bank mergers affect Federal Reserve check volume?," Public Policy Discussion Paper 04-7, Federal Reserve Bank of Boston. [Downloadable!]
  2. Allen N. Berger & Lawrence G. Goldberg & Lawrence J. White, 2001. "The effects of dynamic changes in bank competition on the supply of small business credit," Finance and Economics Discussion Series 2001-35, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
    Other versions:
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