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Has Deregulation Affected Births, Deaths, and Marriages in the U.S. Commercial Banking Industry?

Author

Listed:
  • Yongil Jeon

    (Central Michigan University)

  • Stephen M. Miller

    (University of Nevada, Las Vegas, and University of Connecticut)

Abstract
Regulatory change not seen since the Great Depression swept the U.S. banking industry beginning in the early 1980s and culminating with the Interstate Banking and Branching Efficiency Act of 1994. Banking analysts anticipated dramatic consolidation with large numbers of mergers and acquisitions. Less well documented, but equally important, was the continuing entry of new banks, tempering the decline in the overall number of banking institutions. This paper examines whether deregulation affected bank new-charter (birth), failure (death), and merger (marriage) rates during the 1980s and 1990s after controlling for bank performance and state economic activity. We find evidence that intrastate deregulation stimulated births and marriages, but not deaths. Moreover, we find little evidence that interstate deregulation affected births, deaths, or marriages, except that the marriage rate rose after the implementation of the Interstate Banking and Branching Efficiency Act. Finally, pair-wise temporal causality tests among births, deaths, and marriages show that mergers temporally lead new charters and that failures lead mergers (a demonstration effect).

Suggested Citation

  • Yongil Jeon & Stephen M. Miller, 2005. "Has Deregulation Affected Births, Deaths, and Marriages in the U.S. Commercial Banking Industry?," Working papers 2005-24, University of Connecticut, Department of Economics.
    • Handle: RePEc:uct:uconnp:2005-24
    Note: An earlier version, "Births, Deaths, and Marriages in the U.S. Commercial Banking Industry" was presented at the Eastern Economic Association meetings, New York City, February 2001. We acknowledge the helpful comments of the discussant, T. Critchfield, and a colleague, B. Wimmer.
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    References listed on IDEAS

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    Cited by:

    1. Yongil Jeon & Stephen M. Miller, 2002. "An 'Ideal' Deconposition of Industry Dynamics: An Application to the Nationwide and State Level U.S. Banking Industry," Working papers 2002-23, University of Connecticut, Department of Economics.
    2. Yonjil Jeon & Stephen M. Miller, 2005. "Bank Performance: Market Power or Efficient Structure?," Working papers 2005-23, University of Connecticut, Department of Economics.
    3. Yongil Jeon & Stephen M. Miller, 2002. "Explaining U.S. Commercial Bank Births, Deaths, and Marriages," Working papers 2002-27, University of Connecticut, Department of Economics.
    4. Yongil Jeon & Stephen M. Miller, 2002. "Bank Concentration and Performance," Working papers 2002-25, University of Connecticut, Department of Economics.

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    More about this item

    Keywords

    commercial banks; new charters; failures; mergers;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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