Competition, performance and financial stability in US agricultural banking

Purpose The number of US commercial banks has declined by about 50% over the last two decades. This change could lead to a potential decline in competition and increase market power agricultural banking market. focus this study is examine whether risk failure performance been affected bank consolidations. Design/methodology/approach impact on financial stability studied using Lerner index as measure power. A Z -score constructed stability. Similarly, return assets (net income total ratio), equity loan ratio volume are used measures for banks. Two-way fixed effect regression models estimated performance. Findings Results indicate that U-shaped probability default an inverted proportion lending. There also exists evidence positive but non-linear profitability Originality/value limited literature Agricultural hold more than 40% farm debt. decrease or level may cause adverse relationship key findings imply regulatory strategies should enhancing (reducing) (less) concentrated markets improve health