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

Posted: 14 Jan 2003

See all articles by Dario Focarelli

Dario Focarelli

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

Fabio Panetta

Bank of Italy

Abstract

The general conclusion of the empirical literature is that in-market consolidation generates adverse price changes, harming consumers. Previous studies, however, look only at the short-run pricing impact of consolidation, ignoring effects that take longer to materialize. Using a database that includes detailed information on the deposit rates of individual banks in local markets for different categories of depositors, we investigate the long-run price effects of M&As. We find strong evidence that, although consolidation does generate adverse price changes, these are temporary. In the long run efficiency gains dominate over the market power effect, leading to more favorable prices for consumers.

Keywords: Mergers, Efficiency, Market Power, Bank Mergers

JEL Classification: G21, G34, L1

Suggested Citation

Focarelli, Dario and Panetta, Fabio, Are Mergers Beneficial to Consumers? Evidence from the Market for Bank Deposits. Available at SSRN: https://ssrn.com/abstract=360200

Dario Focarelli (Contact Author)

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

Fabio Panetta

Bank of Italy ( email )

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

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