The Competitive Effect of a Bank Megamerger on Credit Supply
Johan Hombert (),
Henri Fraisse and
Mathias Lé ()
No 1146, HEC Research Papers Series from HEC Paris
We study the effect of a merger between two large banks on credit market competition. We identify the competitive effect of the merger using matched loan-level and firm-level data and exploiting variation in the merging banks' market overlap across local lending markets. On the credit market side, we find a reduction in lending, in particular through termination of relationships. In the average market, bank credit decreases by 2.7%. On the real side, firm exit increases by 4%, whereas firms that do not exit and firms that start up experience no adverse real effect on investment and employment.
Keywords: Bank megamerger; Banking competition; Credit Supply; Merger (search for similar items in EconPapers)
JEL-codes: G21 L13 (search for similar items in EconPapers)
Pages: 26 pages
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Journal Article: The competitive effect of a bank megamerger on credit supply (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:ebg:heccah:1146
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