Merger and Acquisition Activity as Driver of Spatial Clustering: The Spatial Evolution of the Dutch Banking Industry, 1850-1993

This article investigates the extent to which merger and acquisition (M&A) activity contributed to the spatial clustering of the Dutch banking industry in Amsterdam. This analysis is based on a unique database of all banks in the Netherlands that existed in the period 1850-1993. We found that spatial clustering of the Dutch banking industry was not driven by the fact that banks performed better in the Amsterdam region: being located in Amsterdam decreased rather than increased the survival chances of banks. However, banks in Amsterdam were disproportionally active in acquiring other banks outside Amsterdam. Experience in M&As accumulated mainly in the Amsterdam region, which in turn had a positive impact on the survival chances of banks located there. Our findings suggest that M&A activity was a driving force behind the spatial clustering of the Dutch banking industry between 1850 and 1993.