Interstate Banking and the Viability of Small, Independent Banks: Further Evidence on Market Share Accumulation by New Banks

• DOI: 10.1177/0003603X8703200407
• Date: 01 December 1987
• Author: John T. Rose,Donald T. Savage
• Published date: 01 December 1987
• Subject Matter: Economic

The Antitrust Bulletin/Winter 1987

Interstate banking and the viability

of

small, independent banks:

further evidence on market share

accumulation by new banks

BY

JOHN

T. ROSE· and DONALD T.

SAVAGE··

1007

Since 1982, over four-fifths of the states have enacted laws

permitting some

entry-now

or at a specified future

date-by

out-of-state bank holding companies. In response, approximately

250 interstate bank mergers and acquisitions have been consum-

mated, providing the initial framework for an eventual structure

of full nationwide banking.

The evolution of interstate banking raises the issue of the

viability

of

small, independent banks. Opponents

of

nationwide

banking often argue that such banks will be unable to compete

effectively with large, nationwide banking organizations. The

result, it is argued, will be the demise of the small banking

institution, with attendant adverse effects on bank competition

Lacy Professor of Banking, Baylor University, Waco, Texas.

•• Senior Economist, Board of Governors of the Federal Reserve

System, Washington, D.C.

AUTHORS' NOTE: We wish to thank Elaine Peterson

for

research

assis-

tance and Lisa Reidland and George Gott

for

typing. The views

expressed are those

of

the authors and do not necessarily reflect the

position

of

the Federal Reserve Board or its staff.

©1988 by Federal LegalPublications. Inc.