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The Dynamics of Market Entry: The Effects of Mergers and Acquisitions on Entry in the Banking Industry

Listed author(s):
  • Allen N. Berger

    (Board of Governors of the Federal Reserve System, Wharton Financial Institutions Center)

  • Seth D. Bonime

    (Pepsi Corporation)

  • Lawrence G. Goldberg

    (Department of Finance, University of Miami)

  • Lawrence J. White

    (Stern School of Business, New York University)

We study the dynamics of market entry following mergers and acquisitions (M&As) using banking industry data. The findings suggest that M&As are associated with statistically and economically significant increases in the probability of entry. The data suggest that M&As affect the proportion of the markets with entry by about 1020%. These findings also suggest that entry may be part of an "external" effect of M&As that helps supply credit to some relationship-dependent small business borrowers. Our results are robust to the use of alternative econometric methods, changes in specifications of the exogenous variables, and alteration of the data samples.

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Article provided by University of Chicago Press in its journal Journal of Business.

Volume (Year): 77 (2004)
Issue (Month): 4 (October)
Pages: 797-834

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Handle: RePEc:ucp:jnlbus:v:77:y:2004:i:4:p:797-834
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