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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Toulouse School of Economics (TSE) in its series TSE Working Papers with number 09-113.
Date of creation: Nov 2009
Date of revision: 07 Jun 2012
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.
- Vittoria Cerasi & Barbara Chizzolini & Marc Ivaldi, 2010. "The Impact of Mergers on the Degree of Competition in the Banking Industry," Working Papers 2010.95, Fondazione Eni Enrico Mattei.
- 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-2010-05-22 (All new papers)
- NEP-BAN-2010-05-22 (Banking)
- NEP-COM-2010-05-22 (Industrial Competition)
- NEP-FMK-2010-05-22 (Financial Markets)
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.:
- Bresnahan, Timothy F & Reiss, Peter C, 1991.
"Entry and Competition in Concentrated Markets,"
Journal of Political Economy,
University of Chicago Press, vol. 99(5), pages 977-1009, October.
- Guiso, Luigi & Sapienza, Paola & Zingales, Luigi, 2006.
"The Cost of Banking Regulation,"
CEPR Discussion Papers
5864, C.E.P.R. Discussion Papers.
- Luigi Guiso & Paola Sapienza & Luigi Zingales, 2006. "The Cost of Banking Regulation," NBER Working Papers 12501, National Bureau of Economic Research, Inc.
- Luigi Guiso & Paola Sapienza & Luigi Zingales, 2007. "The Cost of Banking Regulation," Economics Working Papers ECO2007/43, European University Institute.
- Luigi Guiso & Paola Sapienza & Luigi Zingales, 2004. "The cost of banking regulation," Proceedings 937, Federal Reserve Bank of Chicago.
- Bresnahan, Timothy F. & Reiss, Peter C., 1991. "Empirical models of discrete games," Journal of Econometrics, Elsevier, vol. 48(1-2), pages 57-81.
- Martin CihÃ¡k & Simon Wolfe & Klaus Schaeck, 2006. "Are More Competitive Banking Systems More Stable?," IMF Working Papers 06/143, International Monetary Fund.
- Paola Sapienza, 2002. "The Effects of Banking Mergers on Loan Contracts," Journal of Finance, American Finance Association, vol. 57(1), pages 329-367, 02.
- Vittoria Cerasi & Alessandro Fedele & Raffaele Miniaci, 2013. "Product market competition and collateralized debt," Working Papers 238, University of Milano-Bicocca, Department of Economics, revised Mar 2013.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.