Are Mergers Beneficial to Consumers? Evidence from the Italian Market for Bank Deposits

Fabio Panetta () and Dario Focarelli
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Fabio Panetta: Bank of Italy - Research Department
Dario Focarelli: Bank of Italy - Research Department

CEIS Research Paper from Tor Vergata University, CEIS

Abstract: The general conclusion of the empirical literature is that in-market consolidation generates adverse price changes, thereby harming consumers. Previous studies, however, look only at the short-run pricing impact of consolidation, ignoring all effects that take a longer time to materialize. Using a database that includes detailed information on the deposit rate paid by individual banks in local markets to different categories of depositors, we investigate for the first time the long-run pricing effects of M&As. We find strong evidence that, although in the short run consolidation generates adverse price changes, these are only a temporary phenomenon. In the long run efficiency gains dominate over the market power effect of mergers, leading to more favorable prices for consumers.

Keywords: Mergers; Efficiency; Market Power; Bank Mergers (search for similar items in EconPapers)
JEL-codes: G21 G34 L1 (search for similar items in EconPapers)
Pages: 37
Date: 2003-04-18
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Citations: View citations in EconPapers (170)

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