Bank Consolidation and Soft Information Acquisition in Small Business Lending

Yoshiaki Ogura, Hirofumi Uchida

Research output: Contribution to journalArticle

12 Citations (Scopus)

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 languageEnglish
Pages (from-to)173-200
Number of pages28
JournalJournal of Financial Services Research
Volume45
Issue number2
DOIs
Publication statusPublished - 2014 Apr 1

Keywords

  • Bank consolidation
  • Bank merger
  • Decision authority
  • Information acquisition

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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