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

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  • Fabio Panetta

    ()
    (Bank of Italy - Research Department)

  • Dario Focarelli

    (Bank of Italy - Research Department)

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    Abstract

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

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    File URL: ftp://www.ceistorvergata.it/repec/rpaper/No-10-Focarelli,Panetta.pdf
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    Bibliographic Info

    Paper provided by Tor Vergata University, CEIS in its series CEIS Research Paper with number 10.

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    Length: 37
    Date of creation: 18 Apr 2003
    Date of revision:
    Handle: RePEc:rtv:ceisrp:10

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    Postal: CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma
    Phone: +390672595601
    Fax: +39062020687
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    Web page: http://www.ceistorvergata.it
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    Postal: CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma
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    Web: http://www.ceistorvergata.it

    Related research

    Keywords: Mergers; Efficiency; Market Power; Bank Mergers;

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    References

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