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Nationwide branch banking and the presence of large banks in rural areas

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  • R. Alton Gilbert

Abstract

Relaxation of government restrictions on multi- office banking (interstate banking and branching by banks) in recent years has facilitated substantial consolidation of the banking industry in the United States. In this article, R. Alton Gilbert examines the impact of this consolidation on the presence of large banking organizations in rural banking markets. Changes in the presence of large banking organizations in rural areas depend on the history of state regulation of multioffice banking. In the states that have permitted statewide branching for many years, large organizations have had offices in most of the rural counties and accounted for large shares of local deposits in most of the rural counties since at least 1980. ; In contrast, the presence of large banking organizations in rural counties has increased substantially in recent years-in the states that relaxed their regulations of multioffice banking more recently-becoming more like those states that relaxed their regulation of multioffice banking many years ago. In almost all of the rural counties in the nation, however, relatively small banking organizations continue to hold large shares of local deposits. The evidence about the presence of large banking organizations in rural areas consistently supports the view that relatively small banks will continue to be major banking organizations in rural areas.

Suggested Citation

  • R. Alton Gilbert, 2000. "Nationwide branch banking and the presence of large banks in rural areas," Review, Federal Reserve Bank of St. Louis, vol. 82(May), pages 13-28.
    • Handle: RePEc:fip:fedlrv:y:2000:i:may:p:13-28:n:v.82no.3
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    References listed on IDEAS

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    1. Berger, Allen N. & Saunders, Anthony & Scalise, Joseph M. & Udell, Gregory F., 1998. "The effects of bank mergers and acquisitions on small business lending," Journal of Financial Economics, Elsevier, vol. 50(2), pages 187-229, November.
    2. Berger, Allen N. & Demsetz, Rebecca S. & Strahan, Philip E., 1999. "The consolidation of the financial services industry: Causes, consequences, and implications for the future," Journal of Banking & Finance, Elsevier, vol. 23(2-4), pages 135-194, February.
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    6. R. Alton Gilbert, 1997. "Implications of banking consolidation for the financing of rural America," Proceedings – Rural and Agricultural Conferences, Federal Reserve Bank of Kansas City, issue Apr, pages 131-140.
    7. David L. Neff & Paul N. Ellinger, 1996. "Participants in Rural Bank Consolidations," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(3), pages 721-727.
    8. Evanoff, Douglas D, 1988. "Branch Banking and Service Accessibility," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 20(2), pages 191-202, May.
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    Cited by:

    1. Bos, J.W.B. & Kool, C.J.M., 2006. "Bank efficiency: The role of bank strategy and local market conditions," Journal of Banking & Finance, Elsevier, vol. 30(7), pages 1953-1974, July.
    2. Jalal Akhavein & Lawrence G. Goldberg & Lawrence J. White, 2002. "Relationship Lending and Denovo Banks: An examination of Bank Lending to Small Farm Borrowers," Working Papers 02-04, New York University, Leonard N. Stern School of Business, Department of Economics.
    3. Fogel, Kathy & Kali, Raja & Yeager, Tim, 2011. "Have community banks reduced home foreclosure rates?," Journal of Banking & Finance, Elsevier, vol. 35(9), pages 2498-2509, September.
    4. Jalal Akhavein & Lawrence Goldberg & Lawrence White, 2004. "Small Banks, Small Business, and Relationships: An Empirical Study of Lending to Small Farms," Journal of Financial Services Research, Springer;Western Finance Association, vol. 26(3), pages 245-261, December.
    5. Bos, J.W.B. & Kool, C.J.M., 2006. "Bank efficiency: The role of bank strategy and local market conditions," Journal of Banking & Finance, Elsevier, vol. 30(7), pages 1953-1974, July.
    6. R. Alton Gilbert & David C. Wheelock, 2013. "Big banks in small places: are community banks being driven out of rural markets?," Review, Federal Reserve Bank of St. Louis, vol. 95(May), pages 199-218.

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