Do mergers encourage the formation of new banks, Corporate Finance

Do mergers encourage the formation of new banks?

A: Yes. The rise in the number of new banks in the second half of the 1990s coincides with a surge in merger activity in the same period. A study conducted by the Federal Reserve Bank of Kansas City suggests that new bank formation is positively related to prior merger activity.  The study further points out that a higher rate of new bank formation is more strongly related to mergers when ownership shifts away from small organizations to large ones or toward distant organizations.

 

Posted Date: 6/13/2013 6:53:31 AM | Location : United States







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