Competition from large, multimarket firms and the performance of small, single-market firms: evidence from the banking industry
Author: Berger, Allen N. ; Dick, Astrid A. ; Goldberg, Lawrence G. ; White, Lawrence J.INSEAD Area: Economics and Political ScienceIn: Journal of Money Credit and Banking, vol. 39, no. 2-3, March/April 2007 Language: EnglishDescription: p. 331-368.Type of document: INSEAD ArticleNote: Please ask us for this itemAbstract: 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 in the 1990s than in the 1980s. We also isolate the extend 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.| Item type | Current location | Call number | Status | Date due | Barcode | Item holds |
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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 in the 1990s than in the 1980s. We also isolate the extend 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.
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