The Impact of Mergers on the Degree of Competition in the Banking Industry
AbstractThis paper analyses the relation between competition and concentration in the banking sector. The empirical answer is given by testing a monopolistic competition model of bank branching behaviour on individual bank data at county level (départements and provinces) in France and Italy. We propose a measure of the degree of competiveness in each local market that is function also of market structure indicators. We then use the econometric model to evaluate the impact of horizontal mergers among incumbent banks on competition and discuss when, depending on the pre-merger structure of the market and geographic distribution of branches, the merger is anti-competitive. The paper has implications for competition policy as it suggests an applied tool to evaluate the potential anti-competitive impact of mergers.
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Bibliographic InfoPaper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2010.95.
Date of creation: Jul 2010
Date of revision:
Banking Industry; Competition and Market Structure; Merger Policy;
Other versions of this item:
- Cerasi, Vittoria & Chizzolini, Barbara & Ivaldi, Marc, 2010. "The Impact of Mergers on the Degree of Competition in the Banking Industry," CEPR Discussion Papers 7618, C.E.P.R. Discussion Papers.
- Cerasi, Vittoria & Chizzolini, Barbara & Ivaldi, Marc, 2009. "The Impact of Mergers on the Degree of Competition in the Banking Industry," IDEI Working Papers 582, Institut d'Économie Industrielle (IDEI), Toulouse, revised 07 Jun 2012.
- Cerasi, Vittoria & Chizzolini, Barbara & Ivaldi, Marc, 2009. "The Impact of Mergers on the Degree of Competition in the Banking Industry," TSE Working Papers 09-113, Toulouse School of Economics (TSE), revised 07 Jun 2012.
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L59 - Industrial Organization - - Regulation and Industrial Policy - - - Other
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-10-02 (All new papers)
- NEP-BAN-2010-10-02 (Banking)
- NEP-COM-2010-10-02 (Industrial Competition)
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.:
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