The effects of megamergers on efficiency and prices: evidence from a bank profit function

Jalal Akhavein (), Allen Berger () and David B. Humphrey

No 1997-9, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: This paper examines the efficiency and price effects of mergers by applying a frontier profit function to data on bank ``megamergers.'' We find that merged banks experience a statistically significant 16 percentage point average increase in profit-efficiency rank relative to other large banks. Most of the improvement is from increasing revenues, including a shift in outputs from securities to loans, a higher-valued product. Improvements were greatest for the banks with the lowest efficiencies prior to merging, who therefore had the greatest capacity for improvement. By comparison, the effects on profits from merger-related changes in prices were found to be very small.

Keywords: Bank profits; Bank mergers; Prices (search for similar items in EconPapers)
Date: 1997
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (269)

Downloads: (external link)
http://www.federalreserve.gov/pubs/feds/1997/199709/199709abs.html (text/html)
http://www.federalreserve.gov/pubs/feds/1997/199709/199709pap.pdf (application/pdf)

Related works:
Working Paper: The Effects of Megamergers on Efficiency and Prices: Evidence from a Bank Profit Function (2019)
Working Paper: The Effects of Megamergers on Efficiency and Prices: Evidence from a Bank Profit Function (1996)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:1997-9

Access Statistics for this paper

More papers in Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.) Contact information at EDIRC.
Bibliographic data for series maintained by Ryan Wolfslayer ; Keisha Fournillier ().