41 Pages Posted: 24 Jul 2010 Last revised: 21 Oct 2014
Date Written: July 16, 2010
Estimating the impact of bank mergers requires a framework distinguishing endogenous changes in market structure and conduct from exogenous changes. Conventionally, the literature relies on differential analysis, considering market structure as exogenous by using concentration indexes such as the HHI. We introduce an econometric methodology relying on a structural model of the credit market from which we derive a counterfactual scenario of what would have happened if mergers had not occurred. We find that mergers increased firms' access to credit, but had an opposite effect on households. Moreover, we find that mergers led to a widespread decrease in interest rates.
Keywords: banks, mergers, competition
JEL Classification: G21, G34, L10
Suggested Citation: Suggested Citation
Barros, Pedro P. and Bonfim, Diana and Kim, Moshe and Martins, Nuno C., Counterfactual Analysis of Bank Mergers (July 16, 2010). Empirical Economics, Vol. 46, No. 1, 2014. Available at SSRN: https://ssrn.com/abstract=1641305 or http://dx.doi.org/10.2139/ssrn.1641305