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


Table 5: Effects of Consolidation Activity (CA) and Local Community Bank (CB) Market Share on Small Business Loan (SBL) Growth in Urban Markets: 1997-2000

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

Total SBL

<$100K SBL

>$100K SBL

CRE SBL

C&I SBL

Full sample (292 markets)

Overall CA

0.102*

0.084**

0.018

0.002

0.100**

 

(0.052)

(0.036)

(0.039)

(0.030)

(0.041)

 

Within-mkt CA

 

-0.144

-0.041

-0.103

-0.061

-0.083

 

(0.098)

(0.067)

(0.074)

(0.056)

(0.076)

Big acq big CA

 

0.205***

0.146***

0.058

0.030

0.175***

 

(0.069)

(0.047)

(0.052)

(0.039)

(0.053)

Big acq CB CA

 

0.034

-0.022

0.055

0.002

0.032

 

(0.106)

(0.072)

(0.080)

(0.060)

(0.082)

CB CA

 

0.055

0.084

-0.029

0.020

0.035

 

(0.178)

(0.121)

(0.134)

(0.101)

(0.138)

CB SBL mkt share

-0.016

-0.025

0.009

-0.015

0.000

0.008

0.000

0.008

-0.013

0.021

(0.046)

(0.032)

(0.035)

(0.026)

(0.036)

(0.050)

(0.034)

(0.037)

(0.028)

(0.038)

High Herfendahl subsample (94 markets)

Overall CA

0.093

0.099*

-0.006

0.030

0.063

 

(0.087)

(0.051)

(0.075)

(0.050)

(0.065)

 

Within-mkt CA

 

-0.205

-0.004

-0.201

-0.136

-0.069

 

(0.174)

(0.102)

(0.150)

(0.100)

(0.129)

Big acq big CA

 

0.154

0.133**

0.021

0.042

0.112

 

(0.101)

(0.059)

(0.087)

(0.058)

(0.075)

Big acq CB CA

 

0.122

-0.069

0.191

0.134

-0.012

 

(0.209)

(0.123)

(0.180)

(0.120)

(0.156)

CB CA

 

-0.198

-0.036

-0.161

0.068

-0.266

 

(0.316)

(0.185)

(0.272)

(0.181)

(0.235)

CB SBL mkt share

-0.180**

-0.099**

-0.081

-0.103**

-0.077

-0.179**

-0.070

-0.109

-0.119*

-0.060

(0.076)

(0.045)

(0.067)

(0.044)

(0.057)

(0.083)

(0.049)

(0.072)

(0.048)

(0.062)

Low Herfendahl subsample (198 markets)

Overall CA

0.080

0.056

0.024

-0.022

0.102*

 

(0.069)

(0.051)

(0.045)

(0.034)

(0.057)

 

Within-mkt CA

 

-0.112

-0.072

-0.041

0.018

-0.130

 

(0.131)

(0.098)

(0.087)

(0.066)

(0.109)

Big acq big CA

 

0.230**

0.159**

0.070

-0.001

0.231***

 

(0.100)

(0.075)

(0.066)

(0.050)

(0.083)

Big acq CB CA

 

-0.059

-0.049

-0.009

-0.082

0.023

 

(0.134)

(0.100)

(0.088)

(0.067)

(0.112)

CB CA

 

0.212

0.158

0.054

0.004

0.207

 

(0.223)

(0.167)

(0.148)

(0.112)

(0.187)

CB SBL mkt share

0.085

0.030

0.055

0.034

0.051

0.130**

0.062

0.068

0.046

0.084

(0.061)

(0.046)

(0.040)

(0.030)

(0.051)

(0.065)

(0.049)

(0.043)

(0.033)

(0.055)

Low CB share subsample (163 markets)

Overall CA

0.115

0.077**

0.038

0.027

0.088*

 

(0.075)

(0.038)

(0.059)

(0.043)

(0.053)

 

Within-mkt CA

 

-0.238*

-0.060

-0.177*

-0.138*

-0.100

 

(0.134)

(0.069)

(0.106)

(0.076)

(0.094)

Big acq big CA

 

0.187**

0.101**

0.086

0.061

0.126**

 

(0.087)

(0.044)

(0.068)

(0.049)

(0.061)

Big acq CB CA

 

0.090

-0.028

0.118

0.157

-0.068

 

(0.246)

(0.126)

(0.193)

(0.139)

(0.172)

CB CA

 

0.381

0.072

0.309

0.245

0.136

 

(0.462)

(0.236)

(0.364)

(0.261)

(0.324)

CB SBL mkt share

0.098

-0.057

0.155

0.094

0.003

0.079

-0.039

0.119

0.053

0.027

(0.122)

(0.062)

(0.096)

(0.069)

(0.086)

(0.133)

(0.068)

(0.105)

(0.075)

(0.093)

High CB share subsample (129 markets)

All CA

0.076

0.117*

-0.041

-0.047

0.123*

 

(0.080)

(0.068)

(0.056)

(0.043)

(0.067)

 

Within-mkt CA

 

-0.117

-0.032

-0.085

0.064

-0.180

 

(0.170)

(0.144)

(0.120)

(0.092)

(0.142)

Big acq big CA

 

0.207

0.251**

-0.044

0.001

0.207*

 

(0.135)

(0.115)

(0.095)

(0.073)

(0.112)

Big acq CB CA

 

0.066

0.037

0.029

-0.121

0.187

 

(0.143)

(0.122)

(0.102)

(0.078)

(0.120)

CB CA

 

0.041

0.130

-0.089

-0.054

0.095

 

(0.213)

(0.181)

(0.151)

(0.116)

(0.178)

CB SBL mkt share

-0.164

-0.139

-0.025

-0.088

-0.076

-0.126

-0.093

-0.033

-0.069

-0.056

(0.104)

(0.089)

(0.073)

(0.056)

(0.087)

(0.111)

(0.094)

(0.079)

(0.060)

(0.093)

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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