Understanding the Effects of the Merger Boom on Community Banks外文原文.pdf

Understanding the Effects of the Merger Boom on Community Banks By Julapa Jagtiani he merger boom in the U.S. banking industry has caused the number of banking organizations in the nation to fall by nearly Ta third since 1990. Most of this contraction has involved small community banks, whose numbers have fallen by more than 3,000 banks. A common perception is that most of these small banks are being absorbed by large banks. Their disappearance is raising concerns in many communities because small banks are often a major source of personal services and relationship lending to local businesses and depositors. In contrast to this general perception, the effects of the merger boom may be quite different. Despite reducing the number of small banks, the merger boom may to a large extent be joining successful small banks with less successful ones, thereby creating stronger, more efficient, and better managed banks. This article investigates the merger boom in detail, examining who purchased community banks, the relative performance of the merging banks, and the stock price premiums paid for community banks by large and smaller acquirers. The article suggests that the merger boom has the potential to strengthen the community banking sector, as some Julapa Jagtiani is a senior economist at the Federal Reserve Bank of Kansas City. Ross dillard and Alice Chiu, research associates at the bank, helped prepare the article. This article is on the bank’s website at www.KansasCityF. 29 30 FedeRAl ReseR ve BAnK oF KAnsA s Ci Ty community banks are taken over by other, more efficiently run com- munity banks located in the same state. Thus, the community banks that have survived the merger boom may be in a good position to con- tinue serving the local businesses and depositors who value personal service and rel