Articles

The competitive effect of a bank megamerger on credit supply

H. FRAISSE, J. HOMBERT, M. LE

Journal of Banking and Finance

aout 2018, vol. 93, pp.151-161

Départements : Finance, GREGHEC (CNRS)

Mots clés : Bank mergers, Megabanks, Credit supply, SMEs

https://www.sciencedirect.com/science/article/pii/S0378426618301365


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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