Long-term performance of rival banks around bank failures

This paper examines the impact of bank failures on the long-term performance of rival banks. We find that bank failures are associated with changes in long-term performance at rival banks. However, the change in performance is not the same for all banks. Specifically, if the bank failure is a result of a problem that is unique to the failing bank, rival bank performance increases after the failure. However, if the bank failure is due to a general economic decline, rival bank performance decreases after the bank failure. Other differences between the two subgroups are also identified.