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Market Concentration and Its Impact on Community Banks

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  • Andrew P. Meyer

Abstract

This article explores the effect that market concentration has on the ability of community banks to expand in their small markets, especially rural ones. For small banking markets, a community bank is often prevented from selling to a crosstown rival because of market concentration regulations, even if it might be in the best interest of consumers for other reasons. For example, compared to an in-market community bank, a large out-of-market bank holding company may have less interest in local institutions and less knowledge about market conditions and the reputation and quality of local businesses.

Suggested Citation

  • Andrew P. Meyer, 2018. "Market Concentration and Its Impact on Community Banks," The Regional Economist, Federal Reserve Bank of St. Louis, vol. 26(1).
  • Handle: RePEc:fip:fedlre:00178
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    File URL: https://www.stlouisfed.org/publications/regional-economist/first-quarter-2018/concentration-community-banks
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    Cited by:

    1. Dean Corbae & Pablo D'Erasmo, 2021. "Capital Buffers in a Quantitative Model of Banking Industry Dynamics," Econometrica, Econometric Society, vol. 89(6), pages 2975-3023, November.
    2. Dean Corbae & Pablo D'Erasmo, 2021. "Capital Buffers in a Quantitative Model of Banking Industry Dynamics," Working Papers 21-24, Federal Reserve Bank of Philadelphia.
    3. Isabel Gödl-Hanisch, 2023. "Bank Concentration and Monetary Policy Pass-Through," CESifo Working Paper Series 10378, CESifo.
    4. Bruce Mizrach, 2022. "Stablecoins: Survivorship, Transactions Costs and Exchange Microstructure," Papers 2201.01392, arXiv.org, revised Feb 2023.

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