The Impact of Mergers on the Degree of Competition in the Banking Industry

Cerasi, Vittoria, Chizzolini, Barbara and Ivaldi, Marc (2009) The Impact of Mergers on the Degree of Competition in the Banking Industry. TSE Working Paper, n. 09-113, Toulouse

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This paper analyses the relation between competition and concentration in the banking sector. The empirical answer is given by testing a monopolistic competition model of bank branching behaviour on individual bank data at county level (départements and provinces) in France and Italy. We propose a measure of the degree of competiveness in each local market that is function also of market structure indicators. We then use the econometric model to evaluate the impact of horizontal mergers among incumbent banks on competition and discuss when, depending on the pre-merger structure of the market and geographic distribution of branches, the merger is anti-competitive. The paper has implications for competition policy as it suggests an applied tool to evaluate the potential anti-competitive impact of mergers.

Item Type: Monograph (Working Paper)
Language: English
Date: November 2009
Place of Publication: Toulouse
JEL codes: G21 - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
L13 - Oligopoly and Other Imperfect Markets
L59 - Other
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 18 Jan 2012 06:01
Last Modified: 19 Mar 2018 15:33

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