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Bank Consolidation and Small Business Lending: The Role of Community Banks


Table 3: Effects of Consolidation Activity (CA) and Local Community Bank (CB) Market Share on Small Business Loan (SBL) Growth in Urban Markets: 1994-1997

Effects on small business loan (SBL) growth and its decompositions into SBL growth under and over $100,000 and CRE versus C&I SBL. Estimated coefficients and standard errors (reported in parentheses).

 

A. Overall Consolidation Activity

B. Specific Types of Consolidation Activity

Total SBL

<$100K SBL

>$100K SBL

CRE SBL

C&I SBL

TotalSBL

<$100K SBL

>$100K SBL

CRE SBL

C&I SBL

Full sample (292 markets)

Overall CA

-0.233 ***

-0.097 ***

-0.136***

-0.099***

-0.134***

 

(0.048)

(0.033)

(0.044)

(0.030)

(0.032)

 

Within-mkt CA

 

-0.044

-0.047

0.002

-0.003

-0.042

 

(0.107)

(0.075)

(0.097)

(0.067)

(0.070)

Big acq big CA

 

-0.301***

-0.078*

-0.223***

-0.118***

-0.183***

 

(0.063)

(0.045)

(0.058)

(0.040)

(0.041)

Big acq CB CA

 

-0.105

-0.120*

0.015

-0.071

-0.033

 

(0.092)

(0.064)

(0.083)

(0.058)

(0.060)

CB CA

 

0.309*

0.180

0.129

0.040

0.269>**

 

(0.182)

(0.128)

(0.166)

(0.115)

(0.119)

CB SBL mkt share

0.051

0.013

0.038

0.027

0.024

-0.001

0.012

-0.013

0.013

-0.014

(0.040)

(0.027)

(0.036)

(0.025)

(0.026)

(0.043)

(0.030)

(0.039)

(0.027)

(0.028)

High Herfendahl subsample (98 markets)

Overall CA

-0.295***

-0.157**

-0.138*

-0.164***

-0.131***

 

(0.087)

(0.062)

(0.076)

(0.055)

(0.048)

 

Within-mkt CA

 

-0.197

-0.073

-0.124

-0.058

-0.139

 

(0.209)

(0.154)

(0.183)

(0.137)

(0.116)

Big acq big CA

 

-0.393***

-0.090

-0.302***

-0.231***

-0.162***

 

(0.110)

(0.080)

(0.096)

(0.072)

(0.061)

Big acq CB CA

 

0.000

-0.239*

0.239

-0.012

0.012

 

(0.166)

(0.122)

(0.145)

(0.109)

(0.092)

CB CA

0.627*

0.543*

0.084

0.192

0.435**

 

(0.371)

(0.273)

(0.324)

(0.243)

(0.205)

CB SBL mkt share

0.009

0.048

-0.039

0.057

-0.048

-0.054

0.073

-0.126*

0.020

-0.074*

(0.079)

(0.056)

(0.069)

(0.050)

(0.044)

(0.080)

(0.059)

(0.070)

(0.053)

(0.044)

Low Herfendahl subsample (194 markets)

Overall CA

-0.155**

-0.082*

-0.073

-0.039

-0.116***

 

(0.060)

(0.043)

(0.054)

(0.036)

(0.044)

 

Within-mkt CA

 

-0.009

-0.032

0.023

0.005

-0.014

 

(0.121)

(0.086)

(0.110)

(0.074)

(0.089)

Big acq big CA

 

-0.195**

-0.126**

-0.070

-0.034

-0.161***

 

(0.081)

(0.058)

(0.074)

(0.050)

(0.059)

Big acq CB CA

 

-0.088

0.045

-0.133

-0.050

-0.037

 

(0.122)

(0.086)

(0.111)

(0.075)

(0.089)

CB CA

 

0.040

-0.034

0.075

-0.067

0.107

 

(0.206)

(0.146)

(0.188)

(0.127)

(0.151)

CB SBL mkt share

0.088*

-0.014

0.102**

0.013

0.075**

0.059

-0.038

0.097**

0.017

0.042

(0.045)

(0.032)

(0.041)

(0.027)

(0.033)

(0.051)

(0.036)

(0.046)

(0.031)

(0.037)

Low CB share subsample (154 markets)

Overall CA

-0.331***

-0.060

-0.271***

-0.144***

-0.187***

 

(0.071)

(0.041)

(0.057)

(0.042)

(0.043)

 

Within-mkt CA

 

-0.120

0.011

-0.131

0.067

-0.187**

 

(0.155)

(0.091)

(0.126)

(0.092)

(0.094)

Big acq big CA

 

-0.329***

-0.071

-0.257***

-0.165***

-0.163***

 

(0.080)

(0.047)

(0.066)

(0.048)

(0.049)

Big acq CB CA

 

0.047

0.047

0.001

-0.119

0.167

 

(0.295)

(0.174)

(0.241)

(0.175)

(0.180)

CB CA

 

0.602*

0.248

0.353

0.407**

0.195

 

(0.320)

(0.189)

(0.261)

(0.190)

(0.195)

CB SBL mkt share

-0.012

-0.011

0.000

0.022

-0.034

-0.157

-0.061

-0.096

-0.051

-0.106

(0.128)

(0.074)

(0.104)

(0.076)

(0.078)

(0.134)

(0.079)

(0.109)

(0.079)

(0.081)

High CB share subsample (138 markets)

All CA

-0.071

-0.112*

0.041

-0.029

-0.042

 

(0.071)

(0.059)

(0.071)

(0.048)

(0.049)

 

Within-mkt CA

 

0.103

-0.149

0.251

-0.030

0.133

 

(0.167)

(0.137)

(0.166)

(0.113)

(0.113)

Big acq big CA

 

-0.177

-0.056

-0.121

0.005

-0.182**

 

(0.121)

(0.100)

(0.121)

(0.082)

(0.082)

Big acq CB CA

 

-0.107

-0.096

-0.011

-0.022

-0.085

 

(0.114)

(0.094)

(0.113)

(0.077)

(0.077)

CB CA

 

0.155

0.250

-0.095

-0.085

0.240

 

(0.248)

(0.204)

(0.247)

(0.168)

(0.168)

CB SBL mkt share

0.144*

0.108

0.036

0.078

0.066

0.105

0.096

0.008

0.089

0.015

(0.083)

(0.069)

(0.083)

(0.056)

(0.058)

(0.087)

(0.072)

(0.087)

(0.059)

(0.059)

Memo items: 65 markets are both high Herfendahl and low CB share.  105 markets are both low Herfendahl and high CB share.
Note: All regressions include the full set of banking and economic control variables summarized in table 2.1.  *, **, *** indicate significance levels of 10%, 5%, and 1%, respectively.

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