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Do mergers improve information? evidence from the loan market Author info | Abstract | Publisher info | Download info | Related research | Statistics Fabio Panetta
Fabiano Schivardi
Matthew Shum
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We examine the informational effects of M&As by investigating whether bank mergers improve banks’ abilities to screen their borrowers. By exploiting a dataset in which we observe a measure of a borrower’s default risk which the lenders observe only imperfectly, we find evidence of these informational improvements. Mergers lead to a closer correspondence between the default risk of each borrower and the interest rate on its loan: after a merger, risky borrowers experience an increase in the interest rate, while non-risky borrowers enjoy lower interest rates. This finding is robust with respect to a series of alternative explanations. Further results suggest that these information benefits derive from improvements in information processing resulting from the merger, rather than from explicit information sharing on individual customers among the merging parties.
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Article provided by Federal Reserve Bank of Chicago in its journal Proceedings .
Volume (Year): (2004)
Issue (Month): May ()
Pages: 369-411
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Handle: RePEc:fip:fedhpr:y:2004:i:may:p:369-411Contact details of provider: Postal: P.O. Box 834, 230 South LaSalle Street, Chicago, Illinois 60690-0834 Phone: 312/322-5111 Fax: 312/322-5515 Email: Web page: http://www.chicagofed.org/ More information through EDIRC
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Keywords: Bank mergers ; Bank loans ; Banking market ; Other versions of this item:
Article Paper Fabio Panetta & Fabiano Schivardi & Matthew Shum, 2004.
"Do mergers improve information? Evidence from the loan market ,"
Temi di discussione (Economic working papers)
521, Bank of Italy, Economic Research Department.
[Downloadable!] Panetta, Fabio & Schivardi, Fabiano & Shum, Matthew, 2005.
"Do Mergers Improve Information? Evidence from the Loan Market ,"
CEPR Discussion Papers
4961, C.E.P.R. Discussion Papers.
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references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Hans Degryse & Nancy Masschelein & Janet Mitchell, 2005.
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[Downloadable!] (restricted) repec:bep:eapadv:v:7:y:2007:i:1:p:1801-1801 is not listed on IDEAS
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