Data Appendix

“The Dynamics of Market Entry: The Effects of Mergers and Acquisitions on Entry in the Banking Industry”

Allen N. Berger, Seth D. Bonime, Lawrence G. Goldberg, and Lawrence J. White

Journal of Business, forthcoming

Variable Name	Definition	Construction
ENTRY	Dummy variable, equals 1 for any positive bank entry, in a given banking market, in a given year. Entry is defined as a new bank charter (federal or state); we exclude all entrants with gross total assets (GTA) exceeding $1 billion by the end of the entry year and all commercial banks with bank types coded as subject to special analysis, such as bankers’ banks, credit card banks, depository trust companies; and bridge entities. Banking markets are defined as Metropolitan Statistical Areas (MSAs) or non-MSA counties. Sources: National Information Center (NIC), U.S. Call Reports, and the FDIC Summary of Deposits.	Constructed using NIC Attributes Table variables DT_OPEN and CHRT_TYPE_CD, (bank age and charter type, respectively), Call Report variables RCFD2170, RCFD3123, and RCFD3128 (indicate gross total assets), and Summary of Deposits variable SUMD2700 (indicates market presence).
MKT-MERGE	Share of local market deposits in banks involved in mergers in which two or more bank charters are consolidated, averaged over the previous three years. Source: National Information Center.	Constructed using the NIC Transformations Table variables ID_RSSD_E1 and ID_RSSD_E2, which identify entities involved in mergers.
MKT-ACQUIS	Share of local market deposits in banks involved in acquisitions in which the banks retain their separate charters but their top-tier bank holding company ownership changes, averaged over the previous three years. Source: National Information Center.	Constructed using the NIC Derived Items Table variable REG_HH_1_ID, which identifies banks’ top-tier holding companies.
MKT-HERF	Local market Herfindahl index for the previous year, based on deposits. The Herfindahl index is the sum of the squared market shares of all banks that are in the market. Source: FDIC Summary of Deposits.	Constructed using SUMD2700, which indicates total branch deposits.
MKT-SHAREL	Share of market deposits held by large banks (GTA > $1B) for the previous year. Gross total assets (GTA) equals total assets plus loan and lease loss reserves and allocated transfer risk reserve (a reserve for certain foreign loans). Sources: U.S. Call Reports; FDIC Summary of Deposits.	Constructed using SUMD2700, which indicates total branch deposits.
MKT-SHAREM	Share of market deposits held by medium-size banks (GTA from $100M to $1B) for the previous year. Sources: U.S. Call Reports; FDIC Summary of Deposits	Constructed using SUMD2700, which indicates total branch deposits.
MKT-SHAREC	Share of market deposits held by complex banks (owned by out-of-state or multi-layered bank holding company [BHC]) for the previous year. Source: U.S. Call Reports; FDIC Summary of Deposits	Constructed using SUMD2700, which indicates total branch deposits.
UNITB	Dummy variable, equals 1 for a unit banking state as of the previous year. Unit banking states generally allow only one full service office per bank. Sources: Berger, Kashyap, and Scalise (1995); Conference of State Bank Supervisors.
LIMITB	Dummy variable, equals 1 for a limited branching state as of the previous year. Limited branching states generally permit a bank to have multiple branches, but these are restricted in some way (e.g., branches in only one county). (Statewide branching dummy is excluded from the regressions as the base case). Sources: Berger, Kashyap, and Scalise (1995); Conference of State Bank Supervisors.
NEWLIB	Dummy variable, equals 1 if the state moved to a more liberal branching rule during the previous year. Sources: Berger, Kashyap, and Scalise (1995); Conference of State Bank Supervisors.
INTST	Dummy variable, equals 1 for indicating that interstate bank holding company expansion was allowed as of the previous year. Sources: Berger, Kashyap, and Scalise (1995); Conference of State Bank Supervisors.
MKT-GROW	Growth rate of market deposits for the previous year. Source: FDIC Summary of Deposits.	Constructed using SUMD2700, which indicates total branch deposits.
STINCOME	Real state income growth for the previous year. Source: U.S. Department of Commerce.
MKT-PFRAT	Ratio of purchased funds/GTA (market averages) for the previous year. Purchased funds are time deposits over $100,000, foreign deposits, federal funds purchased, demand notes issued to the U.S. treasury, trading liabilities, other borrowed money, mortgage indebtedness and obligations under capitalized leases, and subordinated notes and debentures. Source: U.S. Call Reports.	Bank’s ratio of purchased funds/GTA= Sum(Time Deposits>100K, Foreign Deposits, Federal Funds Purchased, Other Liabilities) / GTA. = [RCON2604 + RCFN2200 + RCFD2800 + (RCFD2170 + RCFD3123 + RCFD3128 - RCFN2200 - RCFD2800 - RCFD3210)] / (RCFD2170 + RCFD3123 + RCFD3128) = (RCFD2170 + RCFD3123 + RCFD3128 + RCON2604 - RCFD3210) / (RCFD2170 + RCFD3123 + RCFD3128) Market-average price calculated as explained in the footnote below.
MKT-LNDEP	Market size (log of market deposits) for the previous year. Source: FDIC Summary of Deposits.	Constructed using SUMD2700, which indicates total branch deposits.
MKT-MDEP1	Dummy variable, equals 1 if the metropolitan market < $1B in deposits for the previous year.. (This variable is excluded as the base case in the 1995-1998 sub-period regressions.) Source: FDIC Summary of Deposits.	Constructed using SUMD2700, which indicates total branch deposits.
MKT-MDEP2	Dummy variable, equals 1 for metropolitan markets from $1B - $5B in deposits for the previous year (this variable is excluded as the base case in the 1980-1998 full sample period regressions). Source: FDIC Summary of Deposits.	Constructed using SUMD2700, which indicates total branch deposits.
MKT-RDEP2	Dummy variable, equals 1 for rural market $100M-$300M in deposits for the previous year. (Dummy for rural markets less than $100M is excluded as the base case in rural market regressions.) Source: FDIC Summary of Deposits.	Constructed using SUMD2700, which indicates total branch deposits.
MKT-RDEP3	Dummy variable, equals 1 for rural markets greater than $300M in deposits for the previous year. Source: FDIC Summary of Deposits.	Constructed using SUMD2700, which indicates total branch deposits.
MKT-P1	Market average price of consumer loans (installment, credit cards, and related plans to individuals, from the bank’s domestic offices) for the previous year. Price is interest income on consumer loans less provision for loan and lease losses and allocated transfer risk allocated to consumer loans, divided by stock of consumer loans. Source: U.S. Call Reports.	Bank’s price of consumer loans = interest income on consumer loans less provisions for loan and lease losses and allocated transfer risk allocated to consumer loans / stock of consumer loans = [interest income on consumer loans - ((net charge-offs on consumer loans/total net charge-offs)´(total provisions))] / [stock of consumer loans] = {(RIAD4054 + RIAD4055) - [[(RIAD4656 + RIAD4657) - (RIAD4666 + RIAD4667)] / (RIAD4635 - RIAD4605)] ´ (RIAD4230 + RIAD4243)]} / RCON1975 Market-average price calculated as explained in the footnote below.
MKT-P2	Market average price of non-real estate business loans (commercial and industrial loans, agricultural loans, loans to depository institutions, etc.) for the previous year. Price is interest income on business loans less provision for loan and lease losses and allocated transfer risk allocated to business loans, divided by stock of business loans. Source: U.S. Call Reports.	Bank’s price of business loans = interest income on business loans less provisions for loan and lease losses and allocated transfer risk allocated to business loans / stock of business loans = [interest income on business loans - ((net charge-offs on business loans/total net charge-offs)´(total provisions))] / [stock of business loans] = {[(RIAD4010 + RIAD4065) - (RIAD4054 + RIAD4055) - RIAD4011] - [[(RIAD4635 - RIAD4656 - RIAD4657 - RIAD4651 - RIAD4652) - (RIAD4605 - RIAD4666 - RIAD4667 - RIAD4661 - RIAD4662)] / (RIAD4635 - RIAD4605)] ´ (RIAD4230 + RIAD4243)]} / (RCFD2122 + RCFD2123 - RCON1975 - RCON1410) Market-average price calculated as explained in the footnote below.
MKT-P3	Market average price of real estate loans for the previous year. Price is interest income on real estate loans less provision for loan and lease losses and allocated transfer risk allocated to real estate loans, divided by stock of real estate loans. Source: U.S. Call Reports.	Bank’s price of real estate loans = interest income on real estate loans less provisions for loan and lease losses and allocated transfer risk allocated to real estate loans / stock of real estate loans = [interest income on real estate loans - ((net charge-offs on real estate loans/total net charge-offs)´(total provisions))] / [stock of real estate loans] = {(RIAD4011) - [[(RIAD4651 + RIAD4652) - (RIAD4661 + RIAD4662)] / (RIAD4635 - RIAD4605)] ´ (RIAD4230 + RIAD4243)]} / RCON1410 Market-average price calculated as explained in the footnote below.
MKT-P4	Market average price of securities (all non-loan financial assets) for the previous year. Price is interest income on securities, divided by stock of securities. Source: U.S. Call Reports.	Bank’s price of securities = interest income on securities / stock of securities = [(RIAD4107 - RIAD4010 - RIAD4065) + (RIAD3521 + RIAD3196 + (RIAD4079 - RIAD4080))] / (RCFD2170 + RCFD3123 + RCFD3128 - RCFD2122 - RCFD2145) Market-average price calculated as explained in the footnote below.
MKT-W1	Market average price of purchased funds for the previous year. Price is expense of purchased funds, divided by stock of purchased funds. Source: U.S. Call Reports.	Bank’s price of purchased funds = expense of purchased funds / stock of purchased funds = [RIADA517 + RIAD4172 + RIAD4180 + (RIAD4073 - RIADA517 - RIAD4509 - RIAD4511 - RIADA518 - RIAD4508 - RIAD4172 - RIAD4180)] / [RCON2604 + RCFN2200 + RCFD2800 - (RCFD2170 + RCFD3123 + RCFD3128) - (RCON2200 + RCFN2200 + RCFD2800 + RCFD3210)] Market-average price calculated as explained in the footnote below.
MKT-W2	Market average price of core deposits (domestic transactions accounts, time deposits under $100,000, and savings deposits) for the previous year. Price is expense of core deposits, divided by stock of core deposits. Source: U.S. Call Reports.	Bank’s price of core deposits = expense of core deposits / stock of core deposits = [(RIAD4508 - RIAD 4080) + (RIAD4509 + RIAD4511 + RIADA518)] / [RCON2215 + (RCON2200 - RCON2215 - RCON6645 - RCON6646)] Market-average price calculated as explained in the footnote below.
MKT-W3	Market average price of labor (salary plus benefits, in 1000’s of constant 1994 dollars, per employee) for the previous year. Source: U.S. Call Reports.	Bank’s price of labor = salaries and employee benefits / number of employees = RIAD4135 / RIAD4150 Market-average price calculated as explained in the footnote below.
MKT-ROE	Average return on equity (net income, divided by total equity capital) in market for the previous year. Source: U.S. Call Reports.	RIAD4320 / RCFD3210
MKT-NPL	Market average non-performing loan ratio for the previous year. Non performing loan ratio is loans that are past due at least 30 days or are on non-accrual basis, divided by total loans. Source: U.S. Call Reports.	RCFD1406 + RCFD1407 + RCFD1403
MKT-EQRAT	Market average equity (net income)/GTA ratio for the previous year. Source: U.S. Call Reports.	RCFD3210 / (RCFD2170 + RCFD3123 + RCFD3128)
MKT-EFFIC	Market average cost efficiency measure (the negative of the market average residual from estimated cost function) for the previous year. Sources: U.S. Call reports and authors’ calculations.
D1981-1998	Dummy variables for years 1981-1998 (1980 is the base case).

Note: A bank’s markets are the MSAs and non-MSA counties in which it operates. The market-average price is the weighted average of the prices of the other banks in the market excluding the bank’s own price, where the weights are each other bank’s share of the total input usage or total output production of all the other banks in the market. A bank’s price is then the weighted average of the prices it faces in each of its markets, where the weight is the bank’s share of its deposits in that market.

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