Cerasi, Vittoria, Chizzolini, Barbara and Ivaldi, Marc
(2019)
A test of the impact of mergers on bank competition.
Economic Notes, vol. 48 (n° 2).
pp. 1-27.
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Abstract
We propose a new test to evaluate the impact of horizontal mergers on competition in the banking industry. The test is designed to be applied ex ante to potential mergers while being parsimonious in terms of data, as it only uses
information on branches in local markets. The test is a counterfactual exercise based on a two-stage model where banks compete in branching and interest rates and requires comparing the estimated degree of competition in the status quo, where branching networks by banks are those actually observed, with a counterfactual scenario, where the branching network of the new entity is the sum of the branches of the banks involved in the horizontal merger. The statistical difference between the two estimated measures of competition quantifies the impact of the merger.We apply our test to French and Italian mergers.
Item Type: | Article |
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Language: | English |
Date: | July 2019 |
Refereed: | Yes |
Uncontrolled Keywords: | banking industry, competition and market structure, merger policy |
JEL Classification: | G21 - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages L13 - Oligopoly and Other Imperfect Markets L59 - Other |
Subjects: | B- ECONOMIE ET FINANCE |
Divisions: | TSE-R (Toulouse) |
Site: | UT1 |
Date Deposited: | 03 May 2019 07:33 |
Last Modified: | 10 Sep 2021 11:32 |
OAI Identifier: | oai:tse-fr.eu:122944 |
URI: | https://publications.ut-capitole.fr/id/eprint/32442 |