Bank Mergers and Lending Relationships

56 Pages Posted: 22 Sep 2008

See all articles by Judit Montoriol-Garriga

Judit Montoriol-Garriga

La Caixa; Autonomous University of Barcelona - Department of Business Economics

Date Written: September 22, 2008


This paper analyzes the effects of bank mergers on bank-firm relationships. Using matched bank-firm level data, I find that mergers disrupt lending relationships, specially to small borrowers of target banks. However, I find significant positive effects of mergers for borrowers that continue the lending relationship with the consolidated bank. On average, consolidated banks reduce loan interest rates. The most beneficial mergers from the borrower point of view are those involving two large banks and commercial banks. While the reduction in interest rates is larger when the acquirer and the target have some market overlap, the decline is much smaller when there is a significant increase in local banking market concentration.

Keywords: Banking consolidation, Lending relationships, Small business lending

JEL Classification: G21, G34

Suggested Citation

Montoriol-Garriga, Judit and Montoriol-Garriga, Judit, Bank Mergers and Lending Relationships (September 22, 2008). ECB Working Paper No. 934, Available at SSRN: or

Judit Montoriol-Garriga (Contact Author)

Autonomous University of Barcelona - Department of Business Economics ( email )

Edifici B - Campus de la UAB
Bellaterra (Cerdanyola del Vallès)
Barcelona, Barcelona 08193


La Caixa ( email )

Av Diagonal 629
Barcelona, 08028

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