How Have Borrowers Fared in Banking Mega-Mergers?

Kenneth A. Carow, Edward Kane and Rajesh Narayanan

No 10623, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Previous studies of event returns surrounding bank mergers show that banks gain value in megamergers and additional value when they absorb in-market competitors. A portion of these gains has been traced to the increased bargaining power of banks vis-à-vis regulators and other competitors. We demonstrate that increased bargaining power of megabanks adversely affects loan customers of the acquired institution. Wealth losses are greater when loan customers are credit-constrained, the loan customer is smaller, or the acquisition is an in-market deal. These findings reinforce complaints that the ongoing consolidation in banking has unfavorably affected the availability of credit for smaller firms and especially capital-constrained firms.

JEL-codes: G2 (search for similar items in EconPapers)
Date: 2003-07
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Note: CF
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Published as Carow, Kenneth A., Edward J. Kane and Rajesh P. Narayanan. "How Have Borrowers Fared In Banking Megamergers?," Journal of Money, Credit and Banking, 2006, v38(3,Apr), 821-836.

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Journal Article: How Have Borrowers Fared in Banking Megamergers? (2006)
Working Paper: How have borrowers fared in banking mega-mergers? (2005)
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