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

  • Fabio Panetta

    ()

    (Bank of Italy - Research Department)

  • Dario Focarelli

    (Bank of Italy - Research Department)

Registered author(s):

    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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    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
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    Handle: RePEc:rtv:ceisrp:10
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