Historians of our financial system will record this as an age of
deregulation and bank mergers. Deregulation, a cornerstone of President
Reagan's Administration, resulted in federal and state legislation that
contributed to increased competition for financial services and
increased merger activity. During the 1981-1986 period, there were 2,139
mergers in banking and finance, accounting for 16 percent of total
merger activity.l More mergers occurred in banking and finance than in
any other industry. Because of these bank mergers, there are vast
amounts of data avail- able for scholarly research. This book presents
some results of that research which will be of interest to academics,
bankers, investors, legislators, and regulators. The book consists of
ten articles, and it is divided into three parts. Part 1: National and
Regional Bank Mergers gives a broad perspective of merger activity. The
first article by Peter S. Rose compared the growth of bank holding
companies that merged with those that did not merge. One conclusion of
his study was that banks planning mergers tended to be aggressively
managed and were often beset by problems, such as low profitability or
declining loan quality. Mergers were one solution to their problems. But
he found no solid evidence that mergers resulted in greater
profitability or reduced risk. He also observed that acquiring banks did
not seem to grow faster than those choosing not to merge.