The Effects of Savings Banks Mergers on Small Business Lending in Germany

Bloch, Thomas

doi:10.2139/ssrn.1100650

“…To compare the role of big versus small banks on local economic development, we present the market shares of two banking groups in the respective local market. Large commercial banks with branches all over the country belong to the big bank group (Market_Share_Big) in 7 Over the study period from 1995 to 2004 there was consolidation in the savings bank sector with the number of banks falling from 607 to 457 (Bloch, 2008). Simple correlation of our direct cost efficiency measure with M&A activity per year (the latter from Table 4, p37 in Bloch, 2008) reveals an inverse relationship (-0.4138).…”

Section: Data and Variablesmentioning

confidence: 93%

Small Banks and Local Economic Development*

Hakenes

¹

,

Hasan

²

,

Molyneux

³

et al. 2014

View full text Add to dashboard Cite

This paper discusses the effects of small banks on economic growth. We first theoretically show that small banks operating at a regional level can spur local economic growth. As compared with big interregional banks, small regional banks are more effective in promoting local economic growth, especially in regions with lower initial endowments and severe credit rationing. We then test the model predictions using a sample of German banks and corresponding regional statistics. We find that small regional banks are more important funding providers in regions with low access to finance. The empirical results support the theoretical hypotheses.

show abstract

“…To compare the role of big versus small banks on local economic development, we present the market shares of two banking groups in the respective local market. Large commercial banks with branches all over the country belong to the big bank group (Market_Share_Big) in 7 Over the study period from 1995 to 2004 there was consolidation in the savings bank sector with the number of banks falling from 607 to 457 (Bloch, 2008). Simple correlation of our direct cost efficiency measure with M&A activity per year (the latter from Table 4, p37 in Bloch, 2008)…”

mentioning

confidence: 99%

Small Banks and Local Economic Development

Hasan

¹

,

Molyneux

²

,

Xie

³

et al. 2014

View full text Add to dashboard Cite

This paper discusses the effects of small banks on economic growth. We first theoretically show that small banks operating at a regional level can spur local economic growth. As compared with big interregional banks, small regional banks are more effective in promoting local economic growth, especially in regions with lower initial endowments and severe credit rationing. We then test the model predictions using a sample of German banks and corresponding regional statistics. We find that small regional banks are more important funding providers in regions with low access to finance. The empirical results support the theoretical hypotheses.JEL Classification: G21, O16, R11. for their helpful comments. We sincerely thank the referee for his/her detailed comments. Errors and omissions remain the responsibility of the authors.

show abstract

Impact of the Emerging Financial Holding Company Model on Small Business Borrowers' Financial Welfare: Contemporary Evidence from Nigeria Based on the Monti‐Klein Approach

Asogwa¹,

Uzuagu²,

Okereke³

et al. 2018

African Development Review

0

View full text Add to dashboard Cite

This study exploits the adequacy of the Monti‐Klein model to analyse the banking firms' lending behaviour and uses the geometric lag analytic model to detect the lifespan of bank conglomeration impacts on small business financial welfare. We find that, although the impact of emerging conglomerate banks on lending to small businesses is significantly negative (δ = −0.6897; p < 0.01), the effect reverses to a pre‐conglomerate positive status within one year. Hence, bank conglomeration does not negatively affect the financial welfare of small business borrowers in the long run. Contrary to the widespread belief and fear, the negative effects are not permanent. Large banks are feared to have no time for mid‐sized businesses. We find, however, that mere increases in size, as may be caused by economic or internal growth, do not pose a threat to small businesses. Large‐sized banking firms positively and significantly correlate with small and predictable risks (δ = 1.7935; p < 0.01). Hence, contrary to what regulators fear, there is no real issue surrounding the idea that building diversifying banks will influence small business loans negatively. What matters is the means through which large banks emerge. Therefore, regulators ought to exercise caution so that they do not discourage their emergence.

show abstract

The Effects of Savings Banks Mergers on Small Business Lending in Germany

Cited by 4 publications

References 0 publications

Small Banks and Local Economic Development*

Small Banks and Local Economic Development*

Small Banks and Local Economic Development

Impact of the Emerging Financial Holding Company Model on Small Business Borrowers' Financial Welfare: Contemporary Evidence from Nigeria Based on the Monti‐Klein Approach

Contact Info

Product

Resources

About