INTRODUCTION The advent of the Riegle-Neal Interstate Banking and Branching Efficiency Act has relaxed historical geographic restrictions on banks, contributing to the trend of consolidation in the U. S. commercial banking industry. The prospect for such extensive change has led researchers to speculate about the future composition of the banking industry. Forecasts predict that a small number of large banks will control most financial assets in the industry, but many small banks will still survive (Berger, Kashyap & Scalise, 1995; Moore, 1995). The asset size composition of the industry has received much attention recently due to the concern that small business lending might decline if banks consolidate (Berger et al., 1998; Peek & Rosengren, 1998; Strahan & Weston, 1998). In fact, these studies have found that small business lending may not decline. They find evidence against the hypothesis that small business lending will decline as banks become larger. If small banks' presence in credit markets is reduced, then there may be an impact on the availability of credit to small borrowers. Petersen and Rajan (1994) find that the availability of credit is increased when a firm has close ties with its lender. If consolidation results in the disappearance of these lenders, then some loans may cease to have positive net present values and not be made.