SMALL BUSINESS LENDING BY BANKS INVOLVED IN MERGERS

The views expressed are those of the author and do not necessarily reflect the views of the Board of Governors or its staff. The author is grateful to Steve Oliner for several helpful discussions and to Doug Carson for excellent research assistance. The paper uses data on the volume outstanding of small business loans from the midyear Call reports to summarize the nature of small business lending at banks that were involved in mergers between June 1993 and June 1996. Then, a model of gradual adjustment by the consolidated bank following the merger is estimated to determine whether the portfolio share of small business loans at the consolidated bank tends to move over time towards either the pre-merger share at the acquiring bank or the typical share at other banks of roughly the same size as the consolidated bank