Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Competition from Large, Multimarket Firms and the Performance of Small, Single‐Market Firms: Evidence from the Banking Industry

Competition from Large, Multimarket Firms and the Performance of Small, Single‐Market Firms:... 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. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Money, Credit and Banking Wiley

Competition from Large, Multimarket Firms and the Performance of Small, Single‐Market Firms: Evidence from the Banking Industry

Loading next page...
 
/lp/wiley/competition-from-large-multimarket-firms-and-the-performance-of-small-JXEGF3psw9

References (65)

Publisher
Wiley
Copyright
Copyright © 2007 Wiley Subscription Services, Inc., A Wiley Company
ISSN
0022-2879
eISSN
1538-4616
DOI
10.1111/j.0022-2879.2007.00028.x
Publisher site
See Article on Publisher Site

Abstract

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.

Journal

Journal of Money, Credit and BankingWiley

Published: Mar 1, 2007

There are no references for this article.