Has Deregulation Affected Births, Deaths, and Marriages in the U.S. Commercial Banking Industry?

Yongil Jeon and Stephen Miller
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Yongil Jeon: Central Michigan University

No 2005-24, Working papers from University of Connecticut, Department of Economics

Abstract: Regulatory change not seen since the Great Depression swept the U.S. banking industry beginning in the early 1980s and culminating with the Interstate Banking and Branching Efficiency Act of 1994. Banking analysts anticipated dramatic consolidation with large numbers of mergers and acquisitions. Less well documented, but equally important, was the continuing entry of new banks, tempering the decline in the overall number of banking institutions. This paper examines whether deregulation affected bank new-charter (birth), failure (death), and merger (marriage) rates during the 1980s and 1990s after controlling for bank performance and state economic activity. We find evidence that intrastate deregulation stimulated births and marriages, but not deaths. Moreover, we find little evidence that interstate deregulation affected births, deaths, or marriages, except that the marriage rate rose after the implementation of the Interstate Banking and Branching Efficiency Act. Finally, pair-wise temporal causality tests among births, deaths, and marriages show that mergers temporally lead new charters and that failures lead mergers (a demonstration effect).

Keywords: commercial banks; new charters; failures; mergers (search for similar items in EconPapers)
JEL-codes: G21 L51 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2005-01
New Economics Papers: this item is included in nep-ent and nep-reg
Note: An earlier version, "Births, Deaths, and Marriages in the U.S. Commercial Banking Industry" was presented at the Eastern Economic Association meetings, New York City, February 2001. We acknowledge the helpful comments of the discussant, T. Critchfield, and a colleague, B. Wimmer.
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Citations: View citations in EconPapers (1)

Published in Economic Inquiry, April 2007

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Working Paper: Has Deregulation Affected Births, Deaths, and Marriages in the U.S. Commercial Banking Industry? (2002)
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