Are Mergers Beneficial to Consumers? Evidence from the Market for Bank Deposits

Dario Focarelli and Fabio Panetta ()
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Dario Focarelli: Bank of Italy, Economic Research Department
Fabio Panetta: Bank of Italy, Economic Research Department

No 448, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: The general conclusion of the empirical literature is that in-market consolidation generates adverse price changes, harming consumers. Previous studies, however, look only at the short-run pricing impact of consolidation, ignoring all effects that take longer to materialize. Using a database that includes detailed information on the deposit rates of individual banks in local markets for different categories of depositors, we investigate the long-run price effects of M&As for the first time. We find strong evidence that, although consolidation does generate adverse price changes, these are temporary. In the long run efficiency gains dominate over the market power effect, leading to more favorable prices for consumers.

Keywords: mergers; efficiency; market power; bank mergers (search for similar items in EconPapers)
JEL-codes: G21 G34 L1 (search for similar items in EconPapers)
Date: 2002-07
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_448_02

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