WASHINGTON - Banks have paid more for acquisition targets over the past decade primarily because deregulation has increased the number of acquirers, according to a study by the Federal Reserve Bank of Chicago.

Surveying all bank mergers from 1990 to mid-1998, the authors find that bid premiums - the ratio of the market price offered to the book value of equity of the target bank - rose to 2.4 in the years after interstate banking was permitted, from 1.7 in 1990-1994. The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 opened the door to nationwide banking.

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