Finance and Economics Discussion Series: The Effects of Competition from Large, Multimarket Firms on the Performance of Small, Single-Market Firms: Evidence from the Banking Industry

Berger, H Montague Osteen Jr Professor In Banking And Finance Allen N

ISBN 10: 1288711719 / ISBN 13: 9781288711710

Published by Bibliogov, 2013

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Seller Inventory # I-9781288711710

Bibliographic Details

• Title: Finance and Economics Discussion Series: The Effects of Competition from Large, Multimarket Firms on the Performance of Small, Single-Market Firms: Evidence from the Banking Industry
• Publisher: Bibliogov
• Publication Date: 2013
• Language: English
• ISBN 10: 1288711719
• ISBN 13: 9781288711710
• Binding: Soft cover
• Condition: New

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Synopsis

We offer and test two competing hypotheses for the consolidation trend in banking using U.S. banking industry data over the period 1982-2000. Under the efficiency hypothesis, technological progress improved the performance of large, multimarket firms relative to small, single-market firms, whereas under the hubris hypothesis, consolidation was largely driven by corporate hubris. Our results are consistent with an empirical dominance of the efficiency hypothesis over the hubris hypothesis-on net, technological progress allowed large, multimarket banks to compete more effectively against small, single-market banks in the 1990s than in the 1980s. We also isolate the extent to which technological progress occurred through scale versus geographic effects and how they affected the performance of small, single-market banks through revenues versus costs. The results may shed light as well on some of the research and policy issues related to community banking, and on the question of how community banks should be defined.