Bank Deregulation, Consolidation and Stability: Evidence on U.S. M&A Centric Activity

Saqib Aziz and Jean-Jacques Lilti ()
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Saqib Aziz: ESC Rennes School of Business - ESC [Rennes] - ESC Rennes School of Business
Jean-Jacques Lilti: CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique

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Abstract: Employing a difference-in-difference estimation over a sample of 3,447 M&A deals of U.S. banks from 1990 to 2009, we examine the relation between U.S. bank deregulation, M&A centric consolidation and bank stability. Bank deregulation, in terms of its entirety, positively relate with M&A centric consolidation in U.S. However, the evidence on functional- and geographic-diversity aimed deregulatory acts is mixed. Our findings predominantly hold in the pre-crisis period analysis and disappear when the period extends to financial crisis. Lastly, deregulation and consolidation jointly cast negative effects over the stability of U.S. banks. Our findings broadly support the narrative that holds deregulation partly responsible for the 2007 financial calamity.

Keywords: deregulation; M&A; consolidation; concentration; stability (search for similar items in EconPapers)
Date: 2017
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Published in Finance, 2017, 38 (1), pp.85-128. ⟨10.3917/fina.381.0085⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-01717979

DOI: 10.3917/fina.381.0085

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