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The dynamics of market entry: the effects of mergers and acquisitions on do novo entry and small business lending in the banking industry

Author

Listed:
  • Allen N. Berger
  • Seth D. Bonime
  • Lawrence G. Goldberg
  • Lawrence J. White

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entry following mergers and acquisitions (M&As) and the behavior of recent entrants in supplying output that might be withdrawn by the consolidating firms.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.

Suggested Citation

  • Allen N. Berger & Seth D. Bonime & Lawrence G. Goldberg & Lawrence J. White, 1999. "The dynamics of market entry: the effects of mergers and acquisitions on do novo entry and small business lending in the banking industry," Finance and Economics Discussion Series 1999-41, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgfe:1999-41
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    References listed on IDEAS

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    More about this item

    Keywords

    Bank loans; Small business; Bank mergers;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance 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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