Banks with large, interstate branch networks benefit most from mergers, according to four researchers. Joseph P. Hughes of Rutgers University, William Lang of the Office of the Comptroller of the Currency, Loretta J. Mester of the Federal Reserve Bank of Philadelphia, and Choon-Geol Moon of Hanyang University write that bigger banks are more at risk of failing than smaller banks.

But they find banks that expand across state lines offset this risk and actually become stronger financially. "Consolidation that enhances geographic diversity also improves bank safety measured by the risk of insolvency," they write.

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