THE EFFECTS OF BANK MERGERS AND ACQUISITIONS ON SMALL BUSINESS LENDING

We examine the effects of bank M&As on small business lending using da ta on over 6000 recent U,S. bank M&As. We are the first to decompose t he impact of M&As into the static effects from simply melding the ante cedent institutions and the dynamic effects associated with post-M&A r efocusing of the consolidated institution. We are also the first to es timate the dynamic reactions of other local banks. We find that the st atic effects of consolidation reduce small business lending, but are m ostly offset by the reactions of other banks, and in some cases also b y refocusing efforts of the consolidating institutions themselves. (C) 1998 Elsevier Science S.A. All rights reserved.