Understanding the Effects of the Merger Boom on Community Banks【外文原文】.pdf

Understanding the Effects of
the Merger Boom on
Community Banks
By Julapa Jagtiani
he merger boom in the . banking industry has caused the
number of anizations in the nation to fall by nearly
Ta third since 1990. Most of this contraction has involved small
community banks, whose numbers have fallen by more than 3,000
banks. mon perception is that most of these small banks are being
absorbed by large banks. Their disappearance is raising concerns in many
communities because small banks are often a major source of personal
services and relationship lending to local businesses and depositors.
In contrast to this general perception, the effects of the merger
boom may be quite different. Despite reducing the number of small
banks, the merger boom may to a large extent be joining essful
small banks with less essful ones, thereby creating stronger, more
efficient, and better managed banks.
This article investigates the merger boom in detail, examining who
munity banks, the relative performance of the merging
banks, and the stock price premiums paid munity banks by
large and smaller acquirers. The article suggests that the merger boom
has the potential to strengthen munity banking sector, as some
Julapa Jagtiani is a senior economist at the Federal Reserve Bank of Kansas City. Ross
Dillard and Alice Chiu, research associates at the bank, helped prepare the article. This
article is on the bank’s website at .
29
30 Federal Reserve Bank of Kansas City
community banks are taken over by other, more efficiently -
munity banks located in the same state. Thus, munity banks
that have survived the merger boom may be in a good position to con-
tinue serving the local businesses and depositors who value personal
service and relationship lending.
The first section of the article recounts the fall in the number of
munity banks during the bank merger boom and discusses
some of the related public concerns. The second sect