How Have Borrowers Fared in Banking Mega-Mergers? / Kenneth A. Carow, Edward J. Kane, Rajesh Narayanan.

Format:

Book

Author/Creator:

Carow, Kenneth A.

Contributor:

National Bureau of Economic Research.

Kane, Edward J.

Narayanan, Rajesh.

Series:

Working Paper Series (National Bureau of Economic Research) no. w10623.

NBER working paper series no. w10623

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2003.

Summary:

Previous studies of event returns surrounding bank mergers show that banks gain value in megamergers and additional value when they absorb in-market competitors. A portion of these gains has been traced to the increased bargaining power of banks vis-à-vis regulators and other competitors. We demonstrate that increased bargaining power of megabanks adversely affects loan customers of the acquired institution. Wealth losses are greater when loan customers are credit-constrained, the loan customer is smaller, or the acquisition is an in-market deal. These findings reinforce complaints that the ongoing consolidation in banking has unfavorably affected the availability of credit for smaller firms and especially capital-constrained firms.

Notes:

Print version record

July 2003.