The Impacts of Stricter Merger Legislation on Bank Mergers and Acquisitions: Too-Big-To-Fail and Competition

Giancarlo Spagnolo, Elena Carletti, Steven Ongena and Jan-Peter Siedlarek

No 14449, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The effect of regulations on the banking sector is a key question for financial intermediation. This paper provides evidence that merger control regulation, although not directly targeted at the banking sector, has substantial economic effects on bank mergers. Based on an extensive sample of European countries, we show that target announcement premia increased by up to 16 percentage points for mergers involving control shifts after changes in merger legislation, consistent with a market expectation of increased profitability. These effects go hand-in-hand with a reduction in the propensity for mergers to create banks that are too-big-to-fail in their country.

Keywords: Banks; Regulation; Mergers and acquisitions; Merger control; Antitrust (search for similar items in EconPapers)
JEL-codes: G21 G34 K21 L40 (search for similar items in EconPapers)
Date: 2020-02
New Economics Papers: this item is included in nep-ban, nep-com, nep-ind and nep-law
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Journal Article: The impacts of stricter merger legislation on bank mergers and acquisitions: Too-Big-To-Fail and competition (2021)
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