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The Special Characteristics of American Community Banking

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  • Wanting Wang

    () (Central University of Finance and Economics)

Abstract

The banking system in the United States has always been unique in the sense of containing large numbers of small banks closely tied to their local communities. But the banking system in this country has also undergone tremendous change during the last 20 years due to deregulation and mergers. While community banks still comprise the vast majority of banks and maintain strong earning ability, the question arises what are those small banks’ special characters which make community banks success in providing credit to certain business sectors? This paper explores some of the more significant characteristics of community banking, examining the importance of community banks in small-business lending in terms of their ability to handle “soft” data, their tendency to rely on retail deposits for funding, and their emphasis on personal service.

Suggested Citation

  • Wanting Wang, 2012. "The Special Characteristics of American Community Banking," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 2(2), pages 182-189, April.
  • Handle: RePEc:hur:ijaraf:v:2:y:2012:i:2:p:182-189
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    References listed on IDEAS

    as
    1. Strahan, Philip E. & Weston, James P., 1998. "Small business lending and the changing structure of the banking industry1," Journal of Banking & Finance, Elsevier, vol. 22(6-8), pages 821-845, August.
    2. Allen N. Berger & Gregory F. Udell, 2002. "Small Business Credit Availability and Relationship Lending: The Importance of Bank Organisational Structure," Economic Journal, Royal Economic Society, vol. 112(477), pages 32-53, February.
    3. David Carter & James McNulty & James Verbrugge, 2004. "Do Small Banks have an Advantage in Lending? An Examination of Risk-Adjusted Yields on Business Loans at Large and Small Banks," Journal of Financial Services Research, Springer;Western Finance Association, vol. 25(2), pages 233-252, April.
    4. Robert Avery & Katherine Samolyk, 2004. "Bank Consolidation and Small Business Lending: The Role of Community Banks," Journal of Financial Services Research, Springer;Western Finance Association, vol. 25(2), pages 291-325, April.
    5. Kevin J. Stiroh & Jennifer P. Poole, 2000. "Explaining the rising concentration of banking assets in the 1990s," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 6(Aug).
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Community Bank; characteristics; American Community; banking; performance;

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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