36 Pages Posted: 5 Oct 2010 Last revised: 19 Dec 2011
Date Written: October 4, 2010
We assess the effects on the welfare of corporate borrowers of the recent wave of bank consolidations in the United States that has produced a small number of very large banks. Our evidence from a sample of more than 3,000 commercial borrowers from banks involved in large mergers indicates that the wealth effects on these borrowers are highly negative, statistically significant, and economically important. These negative investor perceptions seem to be driven largely by the expectation of changes in banks’ market power resulting from the mergers.
Keywords: Bank megamergers, bank mergers, market power
JEL Classification: G14, G21, G28, G34
Suggested Citation: Suggested Citation
Fraser, Donald R. and Kolari, James W. and Pynnonen, Seppo and Tippens, T. Kyle, Market Power, Bank Megamergers, And the Welfare of Bank Borrowers (October 4, 2010). Journal of Financial Research, Vol. 34, pp. 641-658; Mays Business School Research Paper No. 2011-8. Available at SSRN: https://ssrn.com/abstract=1687312