Bank holding company de novo entry and market share accumulation

• Author: John T. Rose,Donald T. Savage
• Published date: 01 December 1981
• Date: 01 December 1981
• DOI: http://doi.org/10.1177/0003603X8102600406
• Subject Matter: Article

The Antitrust Bulletin/Winter 1981 753

Bank holding company de novo entry

and market share accumulation

BY

JOHN

T. ROSE· and DONALD T.

SAVAGE·

Over the last decade, multibank holding companies have become

an increasingly important element in American banking struc-

ture. In fact, from 1968 to

1977

multibank holding company

banks increased from 4.6 to 15.6 percent

of

all U.S. banks, and

the percentage

of

aggregate bank deposits in these holding com-

panies jumped from 13.2 to 34.6 percent. By and large, this

expansion has involved holding company acquisitions

of

on-go-

ing banks rather than de novo chartering.

Of

the total increase

of

nearly 1,700 multibank holding company banks between 1968

and 1977, approximately 81 percent were acquired as operating

banks.

In spite

of

the role

of

acquisitions in the growth

of

multibank

holding companies, holding company de novo expansion is im-

portant, whether as a means

of

entering another geographic

market or as a substitute for branching within a local market. In

the former instance, de novo entry adds a new competitor to the

market. In the latter case, de novo expansion increases the

Economists, Board of Governors of the Federal ReserveSystem.

AUTHORS'

NOTE: We wish to thank Susan Moody and Elizabeth

Gordon

for

research

assistance.

e1981by Federal

legal

Publications. Inc.