Abstract
We empirically examine the impact of bank consolidation on bank acquisition of soft information about borrowers. Using a dataset of small business financing, we find that mergers of small banks have a negative impact on soft information acquisition, whereas mergers of large banks have no impact. We also find some evidence that an increase in organizational complexity upon a merger, rather than a post-merger cost-cut, is likely to cause a negative and significant impact on soft information acquisition by small banks. These findings are consistent with the organizational theory that predicts a comparative advantage of simple and flat organizations in acquiring and processing soft information.
Original language | English |
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Pages (from-to) | 173-200 |
Number of pages | 28 |
Journal | Journal of Financial Services Research |
Volume | 45 |
Issue number | 2 |
DOIs | |
Publication status | Published - 2014 Apr 1 |
Keywords
- Bank consolidation
- Bank merger
- Decision authority
- Information acquisition
ASJC Scopus subject areas
- Accounting
- Finance
- Economics and Econometrics