Regional Bank Consolidations contribute to cost reduction: Evidence from Japan

Yoshiaki Ogura
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Yoshiaki Ogura: Waseda University

No 2533, Working Papers from Waseda University, Faculty of Political Science and Economics

Abstract: We investigate the effect of regional bank mergers in Japan since the 2000s by applying the DID-event study design. From the estimation we find the following tendency. First, any type of merger reduces costs. Second, no competition reduction effects are found both in loan markets and deposit markets in any type of merger. Third, the cost reduction effect is passed through to users by reducing borrowing costs in any type of merger. Fourth, the cost reduction effect is larger in full-spec mergers than BHC establishments. These findings imply that the regional bank consolidations in Japan reduced operating costs of the regional banking sector without reducing competition. This implies that the regional bank consolidations were beneficial mainly for users.

Keywords: regional banks; bank consolidations; bank holding companies (search for similar items in EconPapers)
JEL-codes: G21 G34 L22 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2026-03
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