IDEAS home Printed from
   My bibliography  Save this article

Multi-office bank lending to small businesses: some new evidence


  • William R. Keeton


In a long-awaited move, Congress enacted legislation last fall authorizing full interstate banking. While most states had already acted to allow some form of entry by outside holding companies, the new law was expected to hasten the spread of large multi-office banking organizations. Most analysts believe the change will benefit the public by increasing competition, improving services to depositors, and reducing banks' vulnerability to local downturns. Concern has been voiced, however, that the benefits of multi-office banking may be achieved at the expense of small businesses. Some analysts worry that large multi-office banks will be less able or less willing to lend to small businesses than the smaller banks they replace.> Keeton investigates the relationship between multi-office banking and small business lending using new information on small business loans in Tenth District states. Data for mid-1994 support the view that further growth in multi-office banking may impose short-run costs on some small businesses. He cautions, though, against concluding that multi-office banking should be curtailed. Instead, regulators should continue to ensure that local banking markets remain competitive, so other banks can step in and fill any gaps in the legitimate credit needs of small businesses.

Suggested Citation

  • William R. Keeton, 1995. "Multi-office bank lending to small businesses: some new evidence," Economic Review, Federal Reserve Bank of Kansas City, vol. 80(Q II), pages 45-57.
  • Handle: RePEc:fip:fedker:y:1995:i:qii:p:45-57:n:v.80no.2

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Donald M. Brown, 1983. "Bank holding company performance studies and the public interest: normative uses for positive analysis," Review, Federal Reserve Bank of St. Louis, vol. 65(Mar), pages 26-34.
    2. John D. Shoenhair & Kenneth Spong, 1992. "Performance of banks acquired on an interstate basis," Financial Industry Perspectives, Federal Reserve Bank of Kansas City, issue Dec, pages 15-32.
    3. Donald P. Jacobs, 1965. "The Interaction Effects Of Restrictions On Branching And Other Bank Regulations," Journal of Finance, American Finance Association, vol. 20(2), pages 332-348, May.
    4. Lawrence, David B. & Klugman, Marie R., 1991. "Interstate banking in rural markets: The evidence from the corn belt," Journal of Banking & Finance, Elsevier, vol. 15(6), pages 1081-1091, December.
    5. Douglas D. Evanoff & Diana Fortier, 1986. "The impact of geographic expansion in banking: some axioms to grind," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 10(May), pages 24-38.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. William R. Keeton, 1996. "Do bank mergers reduce lending to businesses and farmers? New evidence from Tenth District states," Economic Review, Federal Reserve Bank of Kansas City, vol. 81(Q III), pages 63-75.
    2. Robert DeYoung & Gary Whalen, 1994. "Banking Industry Consolidation: Efficiency Issues," Economics Working Paper Archive wp_110, Levy Economics Institute.
    3. Maurizio Zollo & Jeffrey J. Reuer, 2001. "Experience Spillovers across Corporate Development Activities," Center for Financial Institutions Working Papers 01-35, Wharton School Center for Financial Institutions, University of Pennsylvania.
    4. Michael T. Belongia & R. Alton Gilbert, 1986. "Commercial bank lending to agriculture: a comparison of rural independent banks and holding company subsidiaries," Working Papers 1986-005, Federal Reserve Bank of St. Louis.
    5. Brickley, James A. & Linck, James S. & Smith, Clifford Jr., 2003. "Boundaries of the firm: evidence from the banking industry," Journal of Financial Economics, Elsevier, vol. 70(3), pages 351-383, December.
    6. John T. Rose, 1986. "Interstate Banking and Small Business Finance: Implications from Available Evidence," Entrepreneurship Theory and Practice, , vol. 11(2), pages 23-40, October.
    7. John H. Boyd & Stanley L. Graham, 1996. "Consolidation in U.S. banking: implications for efficiency and risk," Working Papers 572, Federal Reserve Bank of Minneapolis.
    8. Sayuri Shirai, 2001. "Searching for New Regulatory Frameworks for the Intermediate Financial Structure in Post-Crisis Asia," Center for Financial Institutions Working Papers 01-28, Wharton School Center for Financial Institutions, University of Pennsylvania.
    9. Robert DeYoung & Gary Whalen, 1999. "Banking Industry Consolidation: Efficiency Issues," Macroeconomics 9906011, University Library of Munich, Germany.
    10. Rodney Pakonen, 1970. "Branch versus unit banking: a survey of the literature," Staff Report 2, Federal Reserve Bank of Minneapolis.
    11. R. Alton Gilbert, 2000. "Nationwide branch banking and the presence of large banks in rural areas," Review, Federal Reserve Bank of St. Louis, vol. 82(May), pages 13-28.
    12. Paulson, Jo Ann, 1987. "Changes In U.S. Financial Markets Relevant To Midwestern Communities," Staff Papers 13372, University of Minnesota, Department of Applied Economics.
    13. Tudor, Kerry William, 1985. "The impact of management ability and market structure on the performance of agricultural banks in Iowa," ISU General Staff Papers 198501010800009749, Iowa State University, Department of Economics.

    More about this item


    Bank loans; Small business;


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedker:y:1995:i:qii:p:45-57:n:v.80no.2. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Zach Kastens (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.