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1 April 2008

Bank Professor Pays Visit to JSU

By Matt Kasper
Star Staff Writer

Reprinted here in its entirety.

JACKSONVILLE The imposing bank with large, long doors, maybe a name engraved into the side this is the domineering financial structure that is facing extinction.

Money is available from ATMs. Balancing a check book is as easy as logging on to a Web site to track the total.

And increasing globalization, says John Jahera, a Colonial Bank distinguished professor from Auburn University, means the banking business is much more diversified internationally.

Location isn't what it used to be.

"I think net banking can work pretty well," he said.

Jahera shared these ideas as an invited speaker at Jacksonville State University Monday morning, where he presented a research paper titled: "What determines the number and value of bank mergers and acquisitions around the globe?"

Overall, the conclusion is that more research needs to take place before publishing because the study results are preliminary, Jahera cautioned.

Jahera and his colleagues are examining international banking business patterns, looking at factors such as the number of deals that are taking place and the total value of deals, he said.

The traditional model of a single bank, confined to a specific geographic region, seems to be in flux.

Besides incorporating variables and data provided by the Dealogic data service on mergers and acquisitions, Jahera said the research includes measurement indexes from the World Bank, which determines a country's financial strength by qualifying for factors such as corruption and openness to democracy.

Just 25 years ago, Jahera said, there were 15,000 banks in the United States.

"(Now) we have 6,000 maybe 7,000 banks," he said.

Then again, smaller banks are also appearing in communities to fill a void created by expanding chains people are unfamiliar with, Jahera added.

Around the world, countries are establishing banks in other areas because of myriad factors, including the strength of the currency and differing economies.

Data compiled by Dealogic shows that from January 1995 to January 2007, 154,061 banking mergers and acquisitions took place in 173 countries, generating around $24.7 trillion.

Among the transactions, 73 percent were domestic versus 27 percent taking place across borders.

The data shows that a drop in mergers and acquisitions followed the dot com bubble burst in 2000.

Overall, Jahera said, the top 35 countries account for 97 percent of the value of transactions and 93 percent of the deals.

Locally, he said, Alabama has not seen a lot of new banks arriving to the area because the state's growth rate is not on par with other southern states such as Georgia and Florida.

"I think they've done a good analysis. You see financial institutions continue to move across borders," said Ronnie Clayton, eminent scholar and professor in finance at JSU.

For Christopher Westley, professor of Economics at JSU, the research also reflects the truth that "capital is cheaper to move nowadays."

About Matthew Kasper

Matthew Kasper covers Jacksonville, Piedmont, Ohatchee and Alexandria for The Star.

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