Determinants and effects of growth strategies in the banking industry

his dissertation examines the linkage between growth choice and changes in performance. Banks are assigned growth strategies of branching, bank acquisition, and/or product expansion. Strategies are assigned for the 1983 to 1988 and the 1986 to 1991 time periods, and changes in performance calculated from 1989 to 1991 and 1992 to 1994 respectively.;Market model results indicate negative and significant cumulative average residuals for publicly traded banks. A significant difference is found between banks that incorporate branching and those that only acquire banks and product expand, indicating the market values branching.;Operating performance models indicate banks that only acquire other banks have significantly lower changes in performance from 1989 to 1991. Banks that primarily branch have significantly lower changes in profit margin. In seven out of twelve models, size is positively related to performance. In every model, the change in the capital ratio is positive and significant. In eight out of twelve models, the change in demand deposits is positive and significantly related to performance.;De novo banks are tested separately to mitigate the ignoring of strategic choices that occur in prior periods. De novo banks that primarily branch have positive and significant changes in ROA and profit margin. The changes in asset size, loan to assets, and bank deposit concentration are significant and positively related to changes in performance. The change in charge-offs to assets is negative and significantly related to changes in performance.;A multinomial logistic model is used to discover determinants of growth choice. The model allows for simultaneous consideration of the three growth choices. Multi-bank holding companies are more likely to bank acquire than branch, or product expand. De novo banks are more likely to branch than any other strategy. Federally chartered banks are more likely to Bank Acquire or Product Expand as compared to Branch. Banks with assets over...