Value creating mergers: British bank consolidation, 1885–1925

Fabio Braggion, Narly Dwarkasing and Lyndon Moore

Explorations in Economic History, 2022, vol. 83, issue C

Abstract: The British banking sector had many small banks in the mid-nineteenth century. From around 1885 until the end of World War One there was a process of increasingly larger mergers between banks. By the end of the merger wave the English and Welsh market was highly concentrated, with only five major banks. News of a merger brought a persistent rise in the share prices of both the acquiring and the target bank (roughly 1% and 7%, respectively). Non-merging banks, especially those whose local market concentration rose because of the merger, saw their stock prices rise. Our findings suggest that the process of bank consolidation increased collusive behavior among merged banks, to the likely detriment of the consumer.

Keywords: Great Britain; Banking; Mergers and acquisitions (search for similar items in EconPapers)
JEL-codes: G34 N23 N24 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:exehis:v:83:y:2022:i:c:s0014498321000449

DOI: 10.1016/j.eeh.2021.101422

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