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


Table 6: Effects of Consolidation Activity (CA) and Local Community Bank (CB) Market Share on Small Business Loan (SBL) Growth in Rural 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&ISBL

Total SBL

<$100K SBL

>$100K SBL

CRE SBL

C&I SBL

Full sample  (760 markets)

Overall CA

0.021

0.057*

-0.036

0.016

0.005

 

(0.042)

(0.034)

(0.036)

(0.031)

(0.022)

 

Within-mkt CA

 

-0.089

-0.090

0.001

-0.076

-0.013

 

(0.104)

(0.084)

(0.090)

(0.077)

(0.055)

Big acq big CA

 

-0.012

0.048

-0.060

-0.016

0.004

 

(0.060)

(0.048)

(0.052)

(0.044)

(0.032)

Big acq CB CA

 

0.119*

0.148***

-0.029

0.097*

0.022

 

(0.069)

(0.056)

(0.060)

(0.051)

(0.037)

CB CA

 

-0.032

-0.068

0.036

-0.011

-0.020

 

(0.104)

(0.084)

(0.089)

(0.076)

(0.055)

CB SBL mkt share

-0.003

-0.047*

0.044

-0.005

0.002

-0.019

-0.052*

0.034

-0.020

0.001

(0.032)

(0.026)

(0.028)

(0.024)

(0.017)

(0.036)

(0.029)

(0.031)

(0.027)

(0.019)

High Herfendahl subsample (553 markets)

Overall CA

0.036

0.062

-0.026

0.024

0.012

 

(0.051)

(0.040)

(0.042)

(0.037)

(0.026)

 

Within-mkt CA

 

-0.121

-0.140

0.019

-0.089

-0.032

 

(0.127)

(0.101)

(0.106)

(0.094)

(0.064)

Big acq big CA

 

0.019

0.069

-0.049

0.000

0.019

 

(0.072)

(0.057)

(0.060)

(0.053)

(0.036)

Big acq CB CA

 

0.139*

0.169**

-0.030

0.108*

0.031

 

(0.083)

(0.066)

(0.069)

(0.061)

(0.042)

CB CA

 

-0.077

-0.146

0.068

-0.038

-0.040

 

(0.130)

(0.103)

(0.109)

(0.096)

(0.066)

CB SBL mkt share

-0.013

-0.060*

0.047

-0.015

0.002

-0.024

-0.061*

0.037

-0.028

0.004

(0.039)

(0.031)

(0.033)

(0.029)

(0.020)

(0.044)

(0.035)

(0.037)

(0.033)

(0.023)

Low Herfendahl subsample (207 markets)

Overall CA

-0.059

0.007

-0.067

-0.030

-0.029

 

(0.061)

(0.057)

(0.069)

(0.046)

(0.045)

 

Within-mkt CA

 

0.214

0.095

0.119

0.041

0.173

 

(0.154)

(0.145)

(0.174)

(0.115)

(0.112)

Big acq big CA

 

-0.159

-0.039

-0.121

-0.070

-0.089

 

(0.096)

(0.091)

(0.109)

(0.072)

(0.070)

Big acq CB CA

 

-0.085

-0.019

-0.066

-0.039

-0.046

 

(0.114)

(0.107)

(0.130)

(0.086)

(0.083)

CB CA

 

0.004

0.063

-0.059

0.036

-0.033

 

(0.135)

(0.127)

(0.154)

(0.101)

(0.099)

CB SBL mkt share

0.025

-0.012

0.037

0.034

-0.010

-0.005

-0.027

0.022

0.020

-0.025

(0.050)

(0.046)

(0.056)

(0.037)

(0.036)

(0.056)

(0.052)

(0.063)

(0.042)

(0.040)

Low CB share subsample (358 markets)

Overall CA

-0.078

-0.027

-0.050

-0.063

-0.015

 

(0.049)

(0.031)

(0.046)

(0.038)

(0.030)

 

Within-mkt CA

 

-0.166

-0.054

-0.111

-0.144

-0.022

 

(0.117)

(0.075)

(0.109)

(0.091)

(0.070)

Big acq big CA

 

-0.036

-0.007

-0.029

-0.048

0.012

 

(0.058)

(0.037)

(0.054)

(0.045)

(0.035)

Big acq CB CA

 

-0.097

-0.076

-0.020

0.001

-0.097

 

(0.116)

(0.074)

(0.107)

(0.090)

(0.069)

CB CA

 

-0.207

0.124

-0.331

-0.127

-0.080

 

(0.250)

(0.159)

(0.232)

(0.194)

(0.150)

CB SBL mkt share

-0.015

0.015

-0.030

-0.028

0.013

-0.010

0.022

-0.032

-0.037

0.028

(0.065)

(0.041)

(0.060)

(0.051)

(0.039)

(0.068)

(0.043)

(0.063)

(0.053)

(0.041)

High CB share subsample (402 markets)

All CA

0.086

0.103*

-0.018

0.056

0.030

 

(0.064)

(0.060)

(0.057)

(0.046)

(0.033)

 

Within-mkt CA

 

0.081

-0.143

0.224

0.059

0.022

 

(0.173)

(0.158)

(0.151)

(0.124)

(0.090)

Big acq big CA

 

0.014

0.128

-0.114

0.059

-0.045

 

(0.157)

(0.144)

(0.138)

(0.113)

(0.082)

Big acq CB CA

 

0.161*

0.232***

-0.071

0.096

0.065

 

(0.085)

(0.078)

(0.075)

(0.061)

(0.044)

CB CA

 

-0.074

-0.116

0.042

-0.062

-0.012

 

(0.117)

(0.107)

(0.103)

(0.084)

(0.061)

CB SBL mkt share

0.006

-0.020

0.026

-0.005

0.012

-0.001

0.007

-0.007

0.003

-0.003

(0.095)

(0.088)

(0.084)

(0.069)

(0.050)

(0.102)

(0.094)

(0.090)

(0.073)

(0.053)

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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