#2001-024A "The Importance of Scale Economies and Geographic Diversification in Community Bank Mergers"
by William R. Emmons, R. Alton Gilbert, and Timothy J. Yeager
November 2001

Mergers of community banks across economic market areas potentially reduce both idiosyncratic and local market risk. A merger may reduce idiosyncratic risk because the larger post-merger bank has a larger customer base. Negative credit and liquidity shocks from individual customers would have smaller effects on the portfolio of the merged entity than on the individual community banks involved in the merger. More...

PUBLISHED: Journal of Financial Services Research, April 2004, 25(2-3), pp. 259-81