The impacts of stricter merger legislation on bank mergers and acquisitions: Too-Big-To-Fail and competition

Elena Carletti, Steven Ongena, Jan-Peter Siedlarek and Giancarlo Spagnolo

Journal of Financial Intermediation, 2021, vol. 46, issue C

Abstract: The effect of regulations on the banking sector is a key question for financial intermediation. This paper provides evidence that merger control regulation, although not directly targeted at the banking sector, has substantial economic effects on bank mergers. Based on an extensive sample of European countries, we show that target announcement premia increased by up to 16 percentage points for mergers involving control shifts after changes in merger legislation, consistent with a market expectation of increased profitability. These effects go hand-in-hand with a reduction in the propensity for mergers to create banks that are too-big-to-fail in their country.

Keywords: Banks; Regulation; Mergers and acquisitions; Merger control; Antitrust (search for similar items in EconPapers)
JEL-codes: G21 G34 K21 L40 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: The Impacts of Stricter Merger Legislation on Bank Mergers and Acquisitions: Too-Big-To-Fail and Competition (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinin:v:46:y:2021:i:c:s1042957320300139

DOI: 10.1016/j.jfi.2020.100859

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