Monday, December 23, 2019

The Impact of Stricter Merger Control on Bank Mergers and Acquisitions. Too-Big-To-Fail and Competition

By: Carletti, Elena (Bocconi University, IGIER, and CEPR); Ongena, Steven (University of Zurich, the Swiss Finance Institute, KU Leuven, and CEPR); Siedlarek, Jan-Peter (Federal Reserve Bank of Cleveland); Spagnolo, Giancarlo (SITE-Stockholm School of Economics, the University of Rome Tor Vergata, EIEF, and CEPR)
Abstract: The effect of regulations on the banking sector is a key question for financial intermediation. This paper provides evidence that merger control regulation, although not directly targeted at the banking sector, has substantial economic effects on bank mergers. Based on an extensive sample of European countries, we show that target announcement premia increased by up to 16 percentage points for mergers involving control shifts after changes in merger legislation, consistent with a market expectation of increased profitability. These effects go hand-in-hand with a reduction in the propensity for mergers to create banks that are too-big-to-fail in their country.
URL: http://d.repec.org/n?u=RePEc:fip:fedcwq:161402&r=com

https://lawprofessors.typepad.com/antitrustprof_blog/2019/12/the-impact-of-stricter-merger-control-on-bank-mergers-and-acquisitions-too-big-to-fail-and-competiti.html

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