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What's Banking Sector Concentration Got to Do with Private Equity Market?

Author

Listed:
  • Oleg Badunenko
  • Saloni Deva
  • Dorothea Schäfer
  • Michael Viertel

Abstract

The paper investigates the link between bank concentration and a country's buyout market. We perform a macro level analysis for 15 European countries during 1997-2007. We estimate the elasticity of the country i's buyout market to country i's concentration in the banking sector. Our major finding suggests that the more concentrated the banking sector is, the better it is for the size of the buyout market. The elasticity ranges from 1 up to 3 percent depending on which bank concentration measure is employed and what segment of buyout market we look at. We also find that bank concentration is irrelevant for the average deal size. To the best of our knowledge, this is the first paper to analyze the link between banking sector developments and the market for leveraged buyouts.

Suggested Citation

  • Oleg Badunenko & Saloni Deva & Dorothea Schäfer & Michael Viertel, 2009. "What's Banking Sector Concentration Got to Do with Private Equity Market?," Working Paper / FINESS 3.4, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwfin:diwfin3.4
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    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.412892.de/diw_finess_03040.pdf
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    Citations

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    Cited by:

    1. Asrat Tsegaye & Syden Mishi, 2012. "The Role of Banks in Monetary Policy Transmission in South Africa," Working Papers 295, Economic Research Southern Africa.

    More about this item

    Keywords

    Private equity financing; corporate finance; banking concentration; market power; banking competition;
    All these keywords.

    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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