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Staying, dropping, or switching : the impacts of bank mergers on small firms

Author

Listed:
  • Hans Degryse

    () (CentER, EBC, TILEC, Tilburg University)

  • Nancy Masschelein

    () (National Bank of Belgium, Financial Department
    Financial Architects)

  • Janet Mitchell

    () (National Bank of Belgium, Financial Department
    CEPR)

Abstract

Assessing the impacts of bank mergers on small firms requires separating borrowers with single versus multiple banking relationships and distinguishing the three alternatives of "staying," "dropping," and "switching" of relationship. Single-relationship borrowers who "switch" to another bank following a merger will be less harmed than those whose relationship is "dropped" and not replaced. Using Belgian data, we find that single-relationship borrowers of target banks are more likely than other borrowers to be dropped. We track post-merger performance and show that many dropped target-bank borrowers are harmed by the merger. Multiple-relationship borrowers are less harmed, as they can better hedge against relationship discontinuations

Suggested Citation

  • Hans Degryse & Nancy Masschelein & Janet Mitchell, 2009. "Staying, dropping, or switching : the impacts of bank mergers on small firms," Working Paper Research 179, National Bank of Belgium.
  • Handle: RePEc:nbb:reswpp:200910-26
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    File URL: https://www.nbb.be/doc/oc/repec/reswpp/wp179en.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Bank mergers; bank lending relationships; SME loans;

    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

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