Whom to Merge with? A Tale of the Spanish Banking Deregulation Process

Posted by D. Daniel Sokol

Ana Lozano-Vivas (Department of Economic Theory, Universidad de Málaga), Miguel A. Meléndez-Jímenez (Department of Economic Theory, Universidad de Málaga), and Antonio J. Morales (Department of Economic Theory, Universidad de Málaga) have posted Whom to Merge with? A Tale of the Spanish Banking Deregulation Process.

ABSTRACT: We put forward a simple spatial competition model to study banks’ strategic responses to the Spanish asymmetric geographic deregulation. We find that once geographic deregulation process finishes, inter-regional mergers between the savings banks are optimal. We claim that the public good nature of the merging activities together with the incentives provided by the deregulation process are the driving factors behind the equilibrium merger of the savings banks. It seems that the economic crisis will finally force regional politicians to allow inter-regional caja mergers, letting the consequences of the removal of geographic barriers in the 80’s come to a fruition with a delay of thirty years.