Penn Wharton Public Policy Initiative

Publication Date

1-2018

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Volume

06

Number

01

Document Type

Brief

Summary

One of the key features of the Dodd-Frank Act is that it imposes specific and costly regulatory requirements on banks that cross the threshold of having more than $10 billion in total assets. Anecdotal accounts have suggested that this threshold has led to increased consolidation in the banking industry. This brief provides new statistical evidence of that phenomenon. Banks that approach the $10 billion threshold are significantly more likely to engage in an acquisition, pay more for that acquisition, and acquire bigger target banks than similar banking institutions did prior to Dodd-Frank. To the extent that policymakers are concerned with further consolidation in the banking industry, these findings should be of interest as they continue to evaluate current regulations and develop new ones, which might include the use of bright line asset thresholds.

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Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial 4.0 License

Bright Lines: How Regulatory Asset Thresholds Change the Banking Industry

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