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Finance and Economics Discussion Series
The Finance and Economics Discussion Series logo links to FEDS home page The Dynamics of Market Entry: The Effects of Mergers and Acquisitions on De Novo Entry and Small Business Lending in the Banking Industry
Allen N. Berger, Seth D. Bonime, Lawrence G. Goldberg, and 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entry following mergers and acquisitions (M&As) and the behavior of recent entrants in supplying output that might be withdrawn by the consolidating firms.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.

Keywords: Entry, barriers to entry, bank, mergers, small business

Full paper (5433 KB PDF)

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Last update: September 29, 1999