1. GROWTH, CONSOLIDATION AND MERGERS IN BANKING: COMMENT.
- Author
-
MOYER, R. CHARLES
- Subjects
BANKING industry ,BANK mergers ,CORPORATE growth ,MARKET saturation ,MARKET entry ,MARKET share ,GROWTH rate ,BANK locations ,BUSINESS expansion ,MERGERS & acquisitions - Abstract
A recent article by Rhoades and Yeats [6] examines the growth characteristics of banks of various size classes, attempts to determine if a consolidation movement is underway in the banking industry, and seeks to ascertain whether the pattern of observed mergers during the 1960-1971 period is conducive to a consolidation movement in banking. In general, the authors' findings confirm earlier research by Alhadeff and Alhadeff [1] showing that large banks tend to grow less rapidly than the banking system as a whole. While the majority of bank mergers during the Rhoades-Yeats' (R-Y) sample period were made by large banks, internal growth by medium size banks apparently was sufficient to offset the impact of the mergers, and led to an overall deconsolidation in banking. The purpose of this comment is to provide insight into the reasons for the R-Y finding that average bank growth rates were lower for banks in the largest size classes ($500 million in deposits and greater) than for banks in the smaller size classes. One possible explanation for the R-Y results is that large, growth oriented banks run into significant regulatory and structural constraints in their attempts to maximize deposit size, or market share. [ABSTRACT FROM AUTHOR]
- Published
- 1976
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