Market Structure after Horizontal Mergers: Evidence from the Banking Industry

Market Structure after Horizontal Mergers: Evidence from the Banking Industry Antitrust agencies use measures of market structure to evaluate the likely competitive effects of proposed mergers, but little is known about how measures of market structure change over time, particularly after consummation of mergers and acquisitions. This paper analyzes the changes in market structure 3 and 5 years after mergers in the US banking industry. Our analysis suggests that concentration decreases and the number of banks increases in banking markets where mergers resulted in high concentration levels. In markets where the level of concentration changed by a relatively large amount, our findings are more ambiguous, as the level of concentration decreases, but no effect is found on the number of competitors. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Market Structure after Horizontal Mergers: Evidence from the Banking Industry

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Publisher
Springer US
Copyright
Copyright © 2009 by Springer Science+Business Media, LLC.
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-009-9217-0
Publisher site
See Article on Publisher Site

Abstract

Antitrust agencies use measures of market structure to evaluate the likely competitive effects of proposed mergers, but little is known about how measures of market structure change over time, particularly after consummation of mergers and acquisitions. This paper analyzes the changes in market structure 3 and 5 years after mergers in the US banking industry. Our analysis suggests that concentration decreases and the number of banks increases in banking markets where mergers resulted in high concentration levels. In markets where the level of concentration changed by a relatively large amount, our findings are more ambiguous, as the level of concentration decreases, but no effect is found on the number of competitors.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Aug 25, 2009

References

  • The effects of bank megamergers on efficiency and prices: Evidence from the profit function
    Akhavein, J. D.; Berger, A. N.; Humphrey, D. B.
  • Bank consolidation and small business lending: The role of community banks
    Avery, R. B.; Samolyk, K. A.

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