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

37 Pages Posted: 18 Apr 2003

See all articles by Fabio Panetta

Fabio Panetta

Bank of Italy

Dario Focarelli

ANIA - Italian Association of Insurance Companies; Catholic University of Milan

Date Written: March 2003

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

JEL Classification: G21, G34, L1

Suggested Citation

Panetta, Fabio and Focarelli, Dario, Are Mergers Beneficial to Consumers? Evidence from the Italian Market for Bank Deposits (March 2003). Available at SSRN: https://ssrn.com/abstract=286992 or http://dx.doi.org/10.2139/ssrn.286992

Fabio Panetta (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy
+39 06 4792 4143 (Phone)
+39 06 4792 3723 (Fax)

Dario Focarelli

ANIA - Italian Association of Insurance Companies ( email )

Via di San Nicola da Tolentino, 72
Rome, 00187
Italy
+39.06.32688619 (Phone)
+39.06.91622570 (Fax)

Catholic University of Milan ( email )

Largo Gemelli 1
Milan, MI Milano 20123
Italy

HOME PAGE: http://https://docenti.unicatt.it/ppd2/it/#/it/docenti/71049/dario-focarelli/profilo

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