Commercial banking and interstate expansion: issues, prospects, and strategies
In: Research for business decisions 74
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In: Research for business decisions 74
In: Research for business decisions No. 33
In: Contemporary economic policy: a journal of Western Economic Association International, Band 6, Heft 2, S. 41-66
ISSN: 1465-7287
Expansion across state boundaries has been the dominant change in the structural landscape of banking. Forty‐one states and the District of Columbia now permit full‐service interstate banking. This paper reviews and analyzes these laws and their related provisions. Geographical liberalization is found to be mostly pro‐competitive.Regional reciprocity statutes dominated the interstate banking landscape until mid‐1985. Of the first 18 laws, 12 were regional. However, the regional approach peaked quickly, and most remaining states enacted nationwide laws—either immediate nationwide bills or regional bills that "trigger" to the nationwide level at a certain date. Presently, 27 of the 42 laws are nationwide. At least 9 states that initially selected regional laws are soon expected to switch to a nationwide approach.Regional banking compacts seemed inherently unstable and difficult to establish. Only the Southeast successfully established a stable regional banking zone. The location of control over the nation's banking assets is being restructured. In some states with well‐capitalized holding companies aggressively exploiting the new laws, banks have grown in size. Other states that were slow to pass legislation, or whose banks are in no financial position to make acquisitions, have lost rank.After a relatively short time, the federal government finally may legislate on the interstate banking issue. Pressure to do so would derive from the different banking structures and regions, problematic competitive dimensions, banks' supervision and regulation necessities, and eventual interstate branching proposals.
In: Contemporary economic policy: a journal of Western Economic Association International, Band 9, Heft 2, S. 12-24
ISSN: 1465-7287
The recent interstate bank merger phenomenon has received little attention in the literature. Specifically, existing studies fail to explain sufficiently the variation of premiums paid and fail to investigate adequately the bank merger wave in terms of its interstate banking context.This study employs models with substantial overall explanatory levels. The interstate banking context proves to be very significant. First, the study considers and finds significant the effective date of a state's interstate statute in relation to a deal's announcement date. This contrasts sharply with other studies. Second, the study uses and also finds significant a binary variable distinguishing intrastate deals from interstate deals. The premiums paid for interstate market entry, on average, exceeded those paid for intrastate transactions. Third, including regional binary variables reveals a pattern of variation in pricing throughout the country. The Southeast, the study's base of comparison, exhibited the highest premium level.Other significant determinants of premiums paid include profitability as measured by returns on equity, growth proxied by state deposit growth and future expected population growth, and charge‐offs to total loans as an indicator of loan quality.
In: Contemporary economic policy: a journal of Western Economic Association International, Band 9, Heft 1, S. 12-24
ISSN: 1465-7287
In: The journal of financial research: the journal of the Southern Finance Association and the Southwestern Finance Association, Band 6, Heft 1, S. 67-81
ISSN: 1475-6803
AbstractThis paper addresses managerial motivation, stockholder motivation, organizational effects of affiliation, and the proper analytical approach to study bank holding companies. A consolidated entity viewpoint is employed. A valuation model is developed and empirically implemented in which important factors such as intra‐organizational effects, service fees, expanded debt capacity, and equity adjustments are considered. These factors have been ignored by conventional studies. In addition, this study's methodology extends considerably that of the prior studies incorporating a consolidated entity valuation approach. A valuation model, despite its requirements for highly specific empirical data, is generally superior over univariate, multivariate, and market models in assessing BHC performance.
In: International journal of public administration: IJPA, Band 30, Heft 8, S. 859-888
ISSN: 0190-0692
In: International journal of public administration, Band 30, Heft 8-9, S. 859-888
ISSN: 1532-4265