The Dynamics of Market Entry: The Effects of Mergers and Acquisitions on De Novo Entry and Small Business Lending in the Banking Industry
- 1 January 1999
- journal article
- Published by Board of Governors of the Federal Reserve System in Finance and Economics Discussion Series
- Vol. 1999 (41) , 1-64
- https://doi.org/10.17016/feds.1999.41
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entry following mergers and acquisitions (M&As;) and the behavior of recent entrants in supplying output that might be withdrawn by the consolidating firms.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
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