Bank holding company affiliation and market share performance

Abstract

This study examines the effect of bank holding company affiliation on the market share performance of banks acquired from 1968–1978. The principal focus of the analysis is on banks acquired in markets without other representation by the parent holding company. Among such banks, holding company affiliation appears to have increased the market share of ‘foothold’ banks (i.e., those with relatively small market share) but reduced the market share of large banks. In both cases, however, the quantitative effect of affiliation is estimated to be very small. Thus, bank regulators may not wish to distinguish on the basis of expected market share performance between ‘foothold’ entry and acquisition of a dominant bank when ruling on market-extension acquisition/merger cases.