Entrance, Exit And Merger Activity In Tennessee’s Banks: A Multivariate Analysis Of Market Behavior And The Business Cycle
Abstract
This paper evaluates the joint contribution of market behavior and macroeconomic fluctuations on merger, entrance and exit in Tennessee’s banking industry from 1966 through 1997. The results suggest minimal business cycle influence on firm entrance, merger or exit through five business cycles. Instead rival behavior, in the form of low cost facility expansion, appears to be correlated with entrance. This suggests that banks respond more in aggregate to rival behavior than to macroeconomic fluctuations in this market. Econometric methods of note include a Vectorautoregression Exogenous, with error correction specification.
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