Staying, dropping or switching: The impacts of bank mergers on small firms

H.A. Degryse, N. Masschelein, J. Mitchell

Research output: Contribution to journalArticleScientificpeer-review

39 Citations (Scopus)

Abstract

Assessing the impacts of bank mergers on small firms requires separating borrowers with single versus multiple banking relationships and distinguishing the three alternatives of “staying,” “dropping,” and “switching” of relationships. Single-relationship borrowers who “switch” to another bank following a merger will be less harmed than those whose relationship is “dropped” and not replaced. Using Belgian data, we find that single-relationship borrowers of target banks are more likely than other borrowers to be dropped. We track postmerger performance and show that many dropped target-bank borrowers are harmed by the merger. Multiple-relationship borrowers are less harmed, as they can better hedge against relationship discontinuations.
Original languageEnglish
Pages (from-to)1102-1140
JournalThe Review of Financial Studies
Volume24
Issue number4
DOIs
Publication statusPublished - 2011

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