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Independent Commercial Bank Mergers and Agricultural Lending Concentration

Published online by Cambridge University Press:  28 April 2015

Bruce L. Ahrendsen ,
Bruce L. Dixon  and
LaDerrek T. Lee
Bruce L. Ahrendsen
Affiliation:
University of Arkansas
Bruce L. Dixon
Affiliation:
University of Arkansas
LaDerrek T. Lee
Affiliation:
Federal Reserve Bank of Kansas City
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Abstract

In an era of rapid consolidation in banking, the effect of mergers on the availability of credit to agricultural businesses is unclear. Commercial bank mergers have profoundly altered the urban credit marketplace and are positioned to do the same for the agricultural credit marketplace. Adjustment models are estimated with data on independent bank consolidations from 1988 through 1995. The regression results bode well for agricultural lending if acquiring banks have larger concentrations of assets in agriculture than acquired banks. Conversely, if acquiring banks have smaller concentrations than acquired banks, acquisitions have a negative impact on agricultural lending. Since most acquiring banks have smaller agricultural loan concentrations than acquired banks, there is concern for agricultural lending. However, other lenders are likely to fill credit gaps that develop.

Keywords

acquisitionagricultural loan portfoliobanksconsolidationmerger
Type
Invited Paper Sessions
Information
Journal of Agricultural and Applied Economics , Volume 31 , Issue 2 , August 1999 , pp. 215 - 227
Copyright
Copyright © Southern Agricultural Economics Association 1999

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