Profitability and Long-term Survival of Community Banks: Evidence from Texas

Ram N. Acharya, Albert Kagan and Timothy Richards

No 21453, 2006 Annual meeting, July 23-26, Long Beach, CA from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: This study examines the impact of distance among competing bank locations on market their pricing behavior. A general spatial autoregressive model that nests both spatial autoregressive and spatial error models is used to examine the impact of distance on pricing behavior of 686 non-metro banks in Texas. Results show that non-metro banks exercise market power in pricing their products. An increase in spatial competition may reduce profitability and challenge long term survival of small community based financial institutions.

Keywords: Financial; Economics (search for similar items in EconPapers)
Pages: 14
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea06:21453

DOI: 10.22004/ag.econ.21453

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