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

  • 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)

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

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Paper provided by National Bank of Belgium in its series Working Paper Research with number 179.

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Length: 45 pages
Date of creation: Oct 2009
Date of revision:
Handle: RePEc:nbb:reswpp:200910-26
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  20. Petersen, Mitchell A & Rajan, Raghuram G, 1994. " The Benefits of Lending Relationships: Evidence from Small Business Data," Journal of Finance, American Finance Association, vol. 49(1), pages 3-37, March.
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