First Quarter 2001
Federal Reserve Bank of Dallas

Economic and Financial Review was published from 1999 until 2001.

Illegal Immigration and Enforcement Along the U.S.–Mexico Border: An Overview
Pia M. Orrenius

Illegal Mexico–U.S. migration has increased dramatically in recent decades. In this article, Pia Orrenius evaluates the causes of this migration and gives an overview of the enforcement and policy responses to date. Orrenius assesses the effectiveness of border enforcement by looking at developments in the smuggling industry, such as smuggler use rates and fees, as well as changes in border-crossing sites. The findings suggest early attempts at enforcement fueled an increase in the demand for and supply of smugglers, with no rise in prices. Only the most recent enforcement initiatives, most significantly Operations Hold-the-Line and Gatekeeper, have been successful in reversing the thirty-year decline in smugglers' fees and moving migrants to remote crossing points. Risks have risen along with smugglers' fees, as reflected in an increasing number of crossing-related deaths since 1995. Orrenius concludes that Mexican and U.S. policymakers should consider a bilateral labor and migration agreement.

B2B eMarketplace Announcements and Shareholder Wealth
Andrew H. Chen and Thomas F. Siems

In the business-to-business (B2B) sector, new supply-chain models within electronic marketplaces (eMarketplaces) offer firms significantly lower procurement costs, increased operating efficiencies, and expanded market opportunities. Using event-study methodology to look at the period July 1999–March 2000, Andrew Chen and Thomas Siems find that investors reacted favorably to B2B eMarketplace announcements, with slightly higher abnormal returns associated with vertical than with horizontal eMarketplaces. They also find significant positive abnormal returns for e-commerce technology providers that partnered with computer industry giants or with competitors in B2B e-commerce initiatives. The abnormal returns are more than three times greater than returns from creating a B2B eMarketplace alone or with Old Economy leaders. These results suggest that, at least for the period studied, shareholders valued alliances between B2B eMarketplace developers more than firms developing e-commerce strategies on their own or with an Old Economy partner.

Consolidation, Technology, and the Changing Structure of Banks' Small Business Lending
David P. Ely and Kenneth J. Robinson

The U.S. banking industry continues to consolidate, with large, complex banking organizations becoming more important. Traditionally, these institutions have not emphasized small business lending. On the other hand, technological advances, particularly credit scoring models, make it easier for banks to extend small business credit. To see what effects these influences might have generated on small business lending, David Ely and Kenneth Robinson explore the small business lending patterns at U.S. banks from 1994 through 1999. They find that larger banks are increasing their market share, most noticeably in the smallest segment of the small business loan market. The authors also present evidence that the size of the average small business loan has declined, especially at larger organizations, and that the gap in lending focus on the smallest small business loans has narrowed between small and large banks. These trends are consistent with increasing use of credit scoring models.