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Effects of bank mergers on concentration and efficiency of the venezuelan banking system, 1998-2005

  • Ruth Guillén

    ()

    (Profesora Asistente. Departamento de Economía e Instituto de Investigaciones Económicas y Sociales, Universidad de Los Andes (ULA). Núcleo Universitario Liria, Edif. G. Piso 3. Mérida-Venezuela.)

  • Bernarda Pinilla

    ()

    (Profesora Titular. Departamento de Economía, Universidad de Los Andes. Núcleo Universitario Liria, Edif. H. Piso 3. Mérida-Venezuela.)

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    This paper analyzes the relation between bank mergers and changes in the concentration and efficiency of the Venezuelan Banking System during the period 1998-2005. Efficiency was estimated through a stochastic cost frontier model. The concentration was measured by deposits and considering the four-firm concentration ratio. The research found evidences that support the idea that mergers are associated with concentration increases. However, the stochastic costs frontier model suggested that banking mergers did not produce efficiency increases; on the contrary, the merged banks were less efficient than non-merged banks.

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    File URL: ftp://iies.faces.ula.ve/Pdf/Revista30/Rev30Guillen.pdf
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    Article provided by Instituto de Investigaciones Económicas y Sociales (IIES). Facultad de Ciencias Económicas y Sociales. Universidad de Los Andes. Mérida, Venezuela in its journal Economía.

    Volume (Year): 35 (2010)
    Issue (Month): 30 (July-December)
    Pages: 103-142

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    Handle: RePEc:ula:econom:v:35:y:2010:i:30:p:103-142
    Contact details of provider: Postal: Facultad de Ciencias Económicas y Sociales. Instituto de Investigaciones Económicas y Sociales. Campus Universitario Liria, Edificio G, Tercer Nivel. Mérida 5101, Estado Mérida, Venezuela
    Phone: +58 74 401111 ext. 1081
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    1. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
    2. Avkiran, Necmi Kemal, 1999. "The evidence on efficiency gains: The role of mergers and the benefits to the public," Journal of Banking & Finance, Elsevier, vol. 23(7), pages 991-1013, July.
    3. Vanlommel, Emil & de Brabander, Bert & Liebaers, Dirk, 1977. "Industrial Concentration in Belgium: Empirical Comparison of Alternative Seller Concentration Measures," Journal of Industrial Economics, Wiley Blackwell, vol. 26(1), pages 1-20, September.
    4. Carlos Alberto CASTRO, 2004. "Eficiencia -X en el sector bancario colombiano," ARCHIVOS DE ECONOMÍA 002439, DEPARTAMENTO NACIONAL DE PLANEACIÓN.
    5. Berger, Allen N. & Mester, Loretta J., 1997. "Inside the black box: What explains differences in the efficiencies of financial institutions?," Journal of Banking & Finance, Elsevier, vol. 21(7), pages 895-947, July.
    6. Allen N. Berger & Rebecca S. Demsetz & Philip E. Strahan, 1998. "The consolidation of the financial services industry: causes, consequences, and implications for the future," Finance and Economics Discussion Series 1998-46, Board of Governors of the Federal Reserve System (U.S.).
    7. Ratti, Ronald A. & Lee, Sunglyong & Seol, Youn, 2008. "Bank concentration and financial constraints on firm-level investment in Europe," Journal of Banking & Finance, Elsevier, vol. 32(12), pages 2684-2694, December.
    8. Berger, Allen N. & Hunter, William C. & Timme, Stephen G., 1993. "The efficiency of financial institutions: A review and preview of research past, present and future," Journal of Banking & Finance, Elsevier, vol. 17(2-3), pages 221-249, April.
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