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Financial consolidation and liquidity: prudential regulation and/or competition policy?

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Author Info
Patrick Van Cayseele () (K.U.Leuven, Belgian Competition Authority)

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Abstract

A model of loan rate competition with liquidity provision by banks is used to study bank mergers. Both loan rate competition and liquidity needs are seen to be "localised" phenomena. This allows for tracing down the effects of particular types of bank mergers. As such, we contrast the effects of "revenue base enhancing" mergers with the effects of mergers "for market power". The optimal post merger loan rate and risk management decisions are derived. The fundamental trade-off between stability and efficiency is often present, indicating that the approval of bank mergers induces difficult policy choices.

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Publisher Info
Paper provided by National Bank of Belgium in its series Research series with number 200405-6.

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Length: 53 pages
Date of creation: May 2004
Date of revision:
Handle: RePEc:nbb:reswpp:200405-6

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Related research
Keywords: bank mergers; merger review process; liquidity; loan Rates;

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Find related papers by JEL classification:
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages
L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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References listed on IDEAS
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.:
  1. John Vickers, 2000. "Monetary union and economic growth," Research series 200005-6, National Bank of Belgium. [Downloadable!]
  2. Luc Aucremanne & Guy Brys & Mia Hubert & Peter J. Rousseeuw & Anja Struyf, 2002. "Inflation, relative prices and nominal rigidities," Research series 200205-1, National Bank of Belgium. [Downloadable!]
    Other versions:
  3. Stephen J. Turnovsky, 2000. "Growth in an open economy: some recent developments," Research series 200005-1, National Bank of Belgium. [Downloadable!]
    Other versions:
  4. Philippe Jeanfils, 2000. "A model with explicit expectations for Belgium," Research series 200003-3, National Bank of Belgium. [Downloadable!]
    Other versions:
  5. Paul Masson, 2000. "Fiscal policy and growth in the context of European integration," Research series 200005-3, National Bank of Belgium. [Downloadable!]
    Other versions:
  6. Patrick Bisciari, 2001. "Nouvelle économie," Documents series 200104, National Bank of Belgium. [Downloadable!]
    Other versions:
  7. Frank Smets & Raf Wouters, 2003. "An Estimated Dynamic Stochastic General Equilibrium Model of the Euro Area," Journal of the European Economic Association, MIT Press, vol. 1(5), pages 1123-1175, 09. [Downloadable!] (restricted)
    Other versions:
  8. Danny Cassimon & Peter-Jan Engelen & Hilde Meersman & Martine Van Wouwe, 2002. "Investment, uncertainty and irreversibility: evidence from belgian accounting data," Research series 200205-4, National Bank of Belgium. [Downloadable!]
  9. Charles Wyplosz, 2000. "Economic growth and the labor markets: Europe's challenge," Research series 200005-4, National Bank of Belgium. [Downloadable!]
  10. Ronald MacDonald, 2000. "The role of the exchange rate in economic growth: a euro-zone perspective," Research series 200005-5, National Bank of Belgium. [Downloadable!]
  11. Alain Nyssens & Paul Butzen & Patrick Bisciari, 2000. "Performances économiques des Etats-Unis dans les années nonante," Documents series 200003-3, National Bank of Belgium. [Downloadable!]
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  12. Michele Cincera, 2002. "Financing constraints, fixed capital and R&D investment decisions of belgian firms," Research series 200205-13, National Bank of Belgium. [Downloadable!]
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  13. Philippe Jeanfils, 2001. "A guided tour of the world of rational expectations models and optimal policies," Research series 2001-06, National Bank of Belgium. [Downloadable!]
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  14. Paul Butzen & Catherine Fuss & Philip Vermeulen, 2002. "The impact of uncertainty on investment plans," Research series 200205-5, National Bank of Belgium. [Downloadable!]
Full 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.)

  1. Philippe Moës, 2006. "The production function approach to the Belgian output gap, Estimation of a Multivariate Structural Time Series Model," Research series 200609-1, National Bank of Belgium. [Downloadable!]
    Other versions:
  2. Olivier Blanchard & Jordi Gali, 2006. "A new Keynesian model with unemployment," Research series 200610-4, National Bank of Belgium. [Downloadable!]
    Other versions:
  3. Joseph Plasmans & Tomasz Michalak & Jorge Fornero, 2006. "Simulation, estimation and welfare implications of monetary policies in a 3-country NOEM model," Research series 200610-6, National Bank of Belgium. [Downloadable!]
  4. François Coppens & David Vivet, 2006. "The single European electricity market: A long road to convergence," Documents series 200605-3, National Bank of Belgium. [Downloadable!]
  5. Philippe Moës, 2008. "Multivariate structural time series models with dual cycles : implications for measurement of output gap and potential growth," Research series 200808-20, National Bank of Belgium. [Downloadable!]
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This page was last updated on 2009-11-25.


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