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Bank mergers in spatially differentiated markets

  • Novo-Peteiro, Jos?A.
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    This paper studies the incentives of banks to merge when competing in differentiated markets. Localized competition effects and spatial competition variables can play a key role in defining the patterns of consolidation in this sector. We consider a model where banks compete in distinct spaces of depositor's characteristics. Regional merger is the outcome of the merger game if the spatial scope of demand is low and/or accessibility of services is not costly outside the home region. Otherwise, cross-regional merger is the outcome of the game. The results are consistent with the recent evolution of banking systems in many developed countries.

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    Article provided by Elsevier in its journal Journal of Economics and Business.

    Volume (Year): 61 (2009)
    Issue (Month): 1 ()
    Pages: 90-96

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    Handle: RePEc:eee:jebusi:v:61:y:2009:i:1:p:90-96
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