Bank Consolidation and Uniform Pricing

112 Pages Posted: 4 Dec 2019 Last revised: 22 Jan 2023

See all articles by Joao Granja

Joao Granja

University of Chicago - Booth School of Business

Nuno Paixao

Bank of Canada

Date Written: January 20, 2023


We evaluate how bank mergers affect consumer welfare when banks set deposit rates uniformly across their branch networks. First, we document that merger-induced changes to local market power are only weakly correlated with pricing decisions. Second, we develop a structural model of the banking sector to simulate equilibrium post-merger deposit rates with and without uniform pricing. The simulated deposit rates from the model with uniform pricing best match the observed changes in deposit rates following bank mergers. We use the model to evaluate antitrust decisions
that force acquirers to divest branches in order to contain local market concentration levels. Our counterfactual exercises suggest that forced divestitures sometimes improve consumer welfare but can also impose substantial consumer welfare losses when antitrust regulators do not consider that uniform pricing practices might lead some acquirers to offer better deposit rates at acquired branches after a merger.

Keywords: Market Concentration, Uniform Pricing, Banking, Deposit Market, Mergers and Acquisitions, Antitrust Review

JEL Classification: D4, G20, G21, G28, G34, L11

Suggested Citation

Granja, Joao and Paixao, Nuno, Bank Consolidation and Uniform Pricing (January 20, 2023). Available at SSRN: or

Joao Granja

University of Chicago - Booth School of Business ( email )

5807 South Woodlawn Avenue
Room 326
Chicago, IL 60637
United States

Nuno Paixao (Contact Author)

Bank of Canada ( email )

234 Wellington Street
Ontario, Ottawa K1A 0G9

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