The Competitive Effect of a Bank Megamerger on Credit Supply

Henri Fraisse, Johan Hombert and Mathias Ll
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Johan Hombert: GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique

Working Papers from HAL

Abstract: 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)
Date: 2016-05-02
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Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-01993387

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