Abstract

Small banks are a major source of credit for small businesses. As banking consolidation continues, will a resulting decline in the presence of small banks adversely affect the availability of that credit? In May 1995, Texas became the first state to opt out of the interstate branching provision of the Riegle-Neal Interstate Banking and Branching Act of 1994. In Texas, foes of interstate banking and branching voiced a concern over how consolidation might affect small business lending and community development. If small banks are increasingly acquired by large, superregional banking companies, they argued, consolidation will have a negative effect on the availability of credit to small businesses and communities. Proponents countered by arguing that despite consolidation, the need for independent community banks will remain, leaving an

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