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The Competitive Effect of a Bank Megamerger on Credit Supply

Abstract : We study the effect of a merger between two large banks on credit market competition. We identify the competitive effect of the merger using matched loan-level and firm-level data and exploiting variation in the merging banks' market overlap across local lending markets. On the credit market side, we find a reduction in lending, in particular through termination of relationships. In the average market, bank credit decreases by 2.7%. On the real side, firm exit increases by 4%, whereas firms that do not exit and firms that start up experience no adverse real effect on investment and employment.
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https://hal-hec.archives-ouvertes.fr/hal-01993387
Contributor : Antoine Haldemann <>
Submitted on : Thursday, January 24, 2019 - 8:35:08 PM
Last modification on : Saturday, January 26, 2019 - 1:14:01 AM

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  • HAL Id : hal-01993387, version 1

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Henri Fraisse, Johan Hombert, Mathias Ll. The Competitive Effect of a Bank Megamerger on Credit Supply. 2016. ⟨hal-01993387⟩

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