Relaxation of the rules governing where banks can expand and new technologies for providing banking services have contributed to rapid consolidation in the industry. In addition, the number of commercial banks in the United States has been shrinking, and banks have been getting larger. Should we...

Paper for a conference sponsored by the Federal Reserve Bank of New York entitled Financial Innovation and Monetary Transmission

This article examines the primary motivation of the bank merger waves in the 1990s. Our investigation of the factors that determine bid premiums paid for target banks focuses on the importance of the financial characteristics of the targets, composition of their boards of directors, and the...

Does banking market power contribute to the formation of non-financial industries populated by few, large firms, or does it instead enhance industry entry? Theoretical arguments could be made to support either side. The banking industry of European Union (EU) countries has been significantly...

We propose a theory of mergers that combines managerial merger motives and a regime shift that may lead to some value- increasing merger opportunities. Anticipation of the regime shift can lead to mergers, either for defensive or positioning reasons. Defensive mergers occur when managers acquire...