Bank Mergers in Late Nineteenth-Century New England: The Contingent Nature of Structural Change

Although New England's unit banking system was declining in profitability during the late nineteenth century, the existing competitive environment prevented large institutions from outperforming their smaller rivals. As a result, there was little change in the structure of the banking system during this period. At the turn of the century, however, a wave of mergers radically transformed the banking sectors of Boston and Providence. Although the greater profitability of the mergers indicates they were a better fit to the economic environment than their smaller predecessors, their creation was only made possible by a special combination of historical circumstances.