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.

Focarelli, D., & Panetta, F. (2003). Are mergers beneficial to consumers? Evidence from the Italian market for bank deposits.

Are mergers beneficial to consumers? Evidence from the Italian market for bank deposits

2003-03

Abstract

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.
en
mergers
efficiency
market power
bank mergers
Focarelli, D., & Panetta, F. (2003). Are mergers beneficial to consumers? Evidence from the Italian market for bank deposits.
Focarelli, D; Panetta, F
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/2108/51
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