Bank Mergers, Acquirer Choice and Small Business Lending: Implications for Community Investment / Bernadette A. Minton, Alvaro G. Taboada, Rohan Williamson.

Format:

Book

Author/Creator:

Minton, Bernadette A.

Contributor:

National Bureau of Economic Research.

Taboada, Alvaro G.

Williamson, Rohan.

Series:

Working Paper Series (National Bureau of Economic Research) no. w29284.

NBER working paper series no. w29284

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2021.

Summary:

We examine the effects of bank merger and local market characteristics on local small business lending. Mergers involving small, in-state acquirers are positively associated with small business loan (SBL) originations in counties where target banks are located. Conversely, mergers involving large, out-of-state acquirers are associated with fewer SBL originations. The analysis suggests that the results are driven by acquirer's choice of target. Small and in-state acquirers target banks that focus more on SBL and targets with strong relationships while large, out-of-state acquirers pursue better performing banks with stronger balance sheets and less focus on SBL. Results are particularly strong in counties with a large number of small firms. Post-merger activity supports banks expanding on their acquisition strategy decisions. The findings suggest that acquirer strategy is important for evaluating the impact of acquisitions on local community development and that one-size-fits-all policy solutions for bank mergers may not produce common local outcomes.

Notes:

Print version record

September 2021.