Lawrence G. Goldberg, Lawrence J. White
ABSTRACT
Recent widespread consolidation in the banking industry has elicited
concern that lending to small businesses will be reduced by the banking
industry. The consolidation, though, has stimulated an upsurge in new bank
charters. This study compares the lending by de novo banks to small businesses
with the lending by similarly sized incumbent banks for years 1987-1994.
We find that the portfolios of de novo banks consistently contain a substantially
higher percentage of small business loans than do the portfolios of similar
incumbents. These results indicate that de novo banks can be part of the
solution to the problems that consolidation may create.
Subject: Banking (Empirical)
Goldberg: (212) 998-0358 lgoldber@stern.nyu.edu
White: (212) 998-0880 lwhite@stern.nyu.edu
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