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


Table 4: Effects of Consolidation Activity (CA) and Local Community Bank (CB) Market Share on Small Business Loan (SBL) Growth in Rural 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

TotalSBL

<$100K SBL

>$100K SBL

CRE SBL

C& I SBL

Total SBL

<$100K SBL

>$100KSBL

CRE SBL

C&I SBL

Full sample (760 markets)

Overall CA

-0.036

0.009

-0.045

-0.031

-0.005

 

(0.032)

(0.034)

(0.036)

(0.022)

(0.020)

 

Within-mkt CA

 

0.058

-0.031

0.089

0.076

-0.018

 

(0.086)

(0.093)

(0.097)

(0.059)

(0.054)

Big acq big CA

 

-0.162***

-0.013

-0.149***

-0.107***

-0.055*

 

(0.048)

(0.053)

(0.055)

(0.034)

(0.031)

Big acq CB CA

 

-0.020

-0.006

-0.014

-0.046

0.025

 

(0.054)

(0.059)

(0.061)

(0.037)

(0.034)

CB CA

 

0.157**

0.103

0.053

0.097**

0.060

 

(0.070)

(0.076)

(0.079)

(0.048)

(0.044)

CB SBL mkt share

0.047**

-0.008

0.055**

0.036**

0.011

0.013

-0.017

0.030

0.017

-0.004

(0.022)

(0.024)

(0.025)

(0.015)

(0.014)

(0.024)

(0.026)

(0.027)

(0.017)

(0.015)

High Herfendahl subsample (561 markets)

Overall CA

-0.027

0.020

-0.047

-0.030

0.003

 

(0.037)

(0.039)

(0.041)

(0.026)

(0.023)

 

Within-mkt CA

 

0.050

0.025

0.025

0.058

-0.008

 

(0.102)

(0.111)

(0.116)

(0.072)

(0.064)

Big acq big CA

 

-0.181***

-0.032

-0.149**

-0.112***

-0.069**

 

(0.055)

(0.060)

(0.063)

(0.038)

(0.034)

Big acq CB CA

 

0.019

0.048

-0.029

-0.049

0.068*

 

(0.062)

(0.068)

(0.071)

(0.044)

(0.039)

CB CA

 

0.192**

0.068

0.125

0.141**

0.051

 

(0.081)

(0.088)

(0.092)

(0.057)

(0.051)

CB SBL mkt share

0.026

-0.035

0.061**

0.029

-0.003

-0.016

-0.048

0.033

0.008

-0.024

(0.025)

(0.027)

(0.028)

(0.018)

(0.016)

(0.028)

(0.030)

(0.031)

(0.019)

(0.017)

Low Herfendahl subsample (199 markets)

Overall CA

-0.054

-0.049

-0.005

-0.012

-0.042

 

(0.068)

(0.074)

(0.076)

(0.045)

(0.043)

 

Within-mkt CA

 

0.156

-0.298*

0.453**

0.154

0.001

 

(0.165)

(0.177)

(0.181)

(0.110)

(0.102)

Big acq big CA

 

-0.074

0.045

-0.119

-0.077

0.003

 

(0.117)

(0.125)

(0.128)

(0.077)

(0.072)

Big acq CB CA

 

-0.158

-0.160

0.001

0.013

-0.171

 

(0.113)

(0.121)

(0.124)

(0.075)

(0.070)

CB CA

 

0.025

0.255

-0.230

-0.084

0.109

 

(0.144)

(0.154)

(0.158)

(0.096)

(0.089)

CB SBL mkt share

0.135**

0.153***

-0.018

0.050

0.085**

0.126**

0.144**

-0.018

0.045

0.081**

(0.053)

(0.058)

(0.059)

(0.035)

(0.033)

(0.057)

(0.061)

(0.062)

(0.038)

(0.035)

Low CB share subsample (355 markets)

Overall CA

-0.139***

-0.071

-0.068

-0.097***

-0.042

 

(0.050)

(0.046)

(0.052)

(0.035)

(0.031)

 

Within-mkt CA

 

-0.095

0.065

0.030

0.081

0.014

 

(0.123)

(0.116)

(0.128)

(0.086)

(0.077)

Big acq big CA

 

-0.229***

-0.068

-0.161***

-0.141***

-0.089**

 

(0.058)

(0.055)

(0.060)

(0.040)

(0.036)

Big acq CB CA

 

-0.172

-0.143

-0.029

-0.231**

0.059

 

(0.136)

(0.129)

(0.142)

(0.095)

(0.085)

CB CA

 

0.395**

-0.103

0.498***

0.247**

0.148

 

(0.154)

(0.146)

(0.161)

(0.108)

(0.096)

CB SBL mkt share

0.029

0.015

0.014

0.068*

-0.039

-0.013

0.022

-0.035

0.049

-0.062*

(0.055)

(0.051)

(0.058)

(0.039)

(0.034)

(0.056)

(0.053)

(0.059)

(0.039)

(0.035)

High CB share subsample (405 markets)

All CA

0.045

0.064

-0.019

0.025

0.020

 

(0.042)

(0.051)

(0.051)

(0.029)

(0.027)

 

Within-mkt CA

 

-0.001

-0.102

0.101

0.094

-0.095

 

(0.123)

(0.151)

(0.151)

(0.085)

(0.079)

Big acq big CA

 

0.062

0.131

-0.069

0.046

0.016

 

(0.106)

(0.130)

(0.130)

(0.074)

(0.068)

Big acq CB CA

 

0.020

0.029

-0.009

-0.018

0.038

 

(0.060)

(0.073)

(0.073)

(0.041)

(0.038)

CB CA

 

0.085

0.145

-0.060

0.051

0.034

 

(0.077)

(0.095)

(0.095)

(0.054)

(0.050)

CB SBL mkt share

0.209***

0.104

0.105

0.088**

0.121***

0.212***

0.116

0.096

0.095*

0.117***

(0.063)

(0.078)

(0.078)

(0.044)

(0.041)

(0.070)

(0.086)

(0.086)

(0.049)

(0.045)

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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