Bank Mergers, Competition and Liquidity

Elena Carletti (), Philipp Hartmann and Giancarlo Spagnolo
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Elena Carletti: Center for Financial Studies, Postal: Taunusanlage 6 , D-60329 Frankfurt am Main , Germany

No 182, Working Paper Series from Sveriges Riksbank (Central Bank of Sweden)

Abstract: We model the impact of bank mergers on loan competition, reserve holdings and aggregate liquidity. A merger creates an internal money market that affects reserve holdings and induces financial cost advantages, but also withdraws liquidity from the interbank market. Loan market competition modifies the heterogeneity in the size of banks, thus affecting aggregate liquidity. Mergers among large banks tend to increase aggregate liquidity needs and thus the liquidity provision in monetary operations by the central bank.

Keywords: Credit market competition; bank reserves; internal money market; banking system liquidity (search for similar items in EconPapers)
JEL-codes: D43 G21 G28 L13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-cwa, nep-fin and nep-ind
Date: 2005-03-01
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Related works:
Journal Article: Bank Mergers, Competition, and Liquidity (2007)
Working Paper: Bank Mergers, Competition and Liquidity (2004)
Journal Article: Bank mergers, competition, and liquidity (2003)
Working Paper: Bank mergers, competition and liquidity (2003)
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Persistent link: http://EconPapers.repec.org/RePEc:hhs:rbnkwp:0182

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