The Determinants of De Novo Bank Survival

Robert DeYoung, Iftekhar Hasan and William C. Hunter

New York University, Leonard N. Stern School Finance Department Working Paper Seires from New York University, Leonard N. Stern School of Business-

Abstract: The number of newly chartered, or 'de novo,' commercial banks in the U.S. has increased every year since 1994. These new banks are potentially important for preserving competition and providing credit in consolidating banking markets. However, like other new business ventures, newly chartered banks can be prone to failure. To investigate the long-run financial viability of newly chartered banks, we estimate a 'split-population' duration model for 656 commercial banks chartered in 1984 and 1985. To provide a benchmark, we estimate a similar model for 1,288 small established banks located in the same geographic markets.

Date: 1999
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