Keywords: Bank, mergers, small business
Abstract: We study the effects of structural changes in banking markets on the supply of credit to small
businesses. Specifically, we examine whether bank mergers and acquisitions (M&As) and entry
have "external" effects on small business loans by other banks in the same local markets. The
results suggest modest positive external effects from these dynamic changes in competition, except
that large banks may reduce small business lending in reaction to entry. We confirm bank size and
age as important determinants of this lending, and show that the measured age effect does not
appear to be driven by local market M&A activity.
Full paper (116 KB PDF)
| Full paper (1181 KB Postscript)
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Last update: August 2, 2001