Bank mergers in spatially differentiated markets

Novo-Peteiro, José A.

Journal of Economics and Business, 2009, vol. 61, issue 1, pages 90-96

Abstract: This paper studies the incentives of banks to merge when competing in differentiated markets. Localized competition effects and spatial competition variables can play a key role in defining the patterns of consolidation in this sector. We consider a model where banks compete in distinct spaces of depositor's characteristics. Regional merger is the outcome of the merger game if the spatial scope of demand is low and/or accessibility of services is not costly outside the home region. Otherwise, cross-regional merger is the outcome of the game. The results are consistent with the recent evolution of banking systems in many developed countries.

Keywords: Bank; mergers; Banking; competition; Market; definition (search for similar items in EconPapers)
Date: 2009

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Persistent link: http://EconPapers.repec.org/RePEc:eee:jebusi:v:61:y:2009:i:1:p:90-96

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