Online citations, reference lists, and bibliographies.
Please confirm you are human
(Sign Up for free to never see this)
← Back to Search

The Effects Of Banking Mergers On Loan Contracts

P. Sapienza
Published 2002 · Business

Save to my Library
Download PDF
Analyze on Scholarcy
Share
This paper studies the effects of banking mergers on individual business borrowers. Using information on individual loan contracts between banks and companies, I analyze the effect of banking consolidation on banks' credit policies. I find that in-market mergers benefit borrowers if these mergers involve the acquisition of banks with small market shares. Interest rates charged by the consolidated banks decrease, but as the local market share of the acquired bank increases, the efficiency effect is offset by market power. Mergers have different distributional effects across borrowers. When banks become larger, they reduce the supply of loans to small borrowers. Copyright The American Finance Association 2002.
This paper references
Horizontal Mergers: An Equilibrium Analysis
J. Farrell (1988)
10.2307/2297430
Financial Intermediation and Delegated Monitoring
D. Diamond (1984)
10.1086/262061
Informal Regulation of Industrial Pollution in Developing Countries: Evidence from Indonesia
Sheoli Pargal (1996)
10.1111/J.1540-6261.1990.TB02427.X
Asymmetric Information, Bank Lending, and Implicit Contracts: A Stylized Model of Customer Relationships
S. Sharpe (1989)
Why do banks merge? some empirical evidence from Italy
D. Focarelli (1999)
10.1111/0022-1082.00483
Information Production and Capital Allocation: Decentralized vs. Hierarchical Firms
J. Stein (2000)
10.2139/SSRN.79588
What Determines the Number of Bank Relationships? Cross-Country Evidence
S. Ongena (1998)
10.2307/2298076
Credit and efficiency in centralized and decentralized economies
M. Dewatripont (1995)
10.1086/261775
Monitoring and Reputation: The Choice between Bank Loans and Directly Placed Debt
D. Diamond (1991)
10.1111/J.1540-6261.1992.TB04662.X
Insiders and Outsiders: The Choice between Informed and Arm's-Length Debt
R. Rajan (1992)
Universal Banking and the Future of Small Business Lending
A. Berger (1995)
10.1016/0378-4266(94)00065-4
The overall gains from large bank mergers
Joel F. Houston (1994)
10.1016/0378-4266(89)90048-4
Loan quality, commercial loan review and loan officer contracting
Gregory F. Udell (1989)
10.2307/2534780
Hostile Takeovers in the 1980s: The Return to Corporate Specialization
S. Bhagat (1990)
10.1016/0378-4266(91)90042-K
Bank commercial loan markets and the role of market structure: evidence from surveys of commercial lending
Timothy H. Hannan (1991)
10.1016/S1573-448X(89)02004-2
Inter-industry studies of structure and performance
R. Schmalensee (1987)
10.1016/S0378-4266(98)00010-7
Small business lending and the changing structure of the banking industry 1 The views in this paper
Philip E. Strahan (1998)
10.2307/2118445
The Effect of Credit Market Competition on Lending Relationships
M. Petersen (1994)
10.2307/1885620
Losses From Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium
S. Salant (1983)
10.2307/2297431
Information Reliability and a Theory of Financial Intermediation
R. S. Ramakrishnan (1984)
Small business credit availability: how important is size of lender?
J. Peek (1995)
10.2139/ssrn.1001240
Small Business Lending and Bank Consolidation: Is There Cause for Concern?
J. Weston (1996)
10.2139/ssrn.303381
What Do State-Owned Firms Maximize? Evidence from Italian Banks
P. Sapienza (2002)
10.1006/jfin.1999.0273
Regular ArticleWhat Determines the Number of Bank Relationships? Cross-Country Evidence☆
S. Ongena (2000)
10.1016/S0378-4266(98)00012-0
Bank consolidation and small business lending: It's not just bank size that matters
J. Peek (1998)
Commercial bank information: implications for the structure of banking
Leonard I. Nakamura (1991)
10.1086/296668
Relationship Lending and Lines of Credit in Small Firm Finance
A. Berger (1994)
Small borrowers and the survival of the small bank: is mouse bank Mighty or Mickey?
Leonard I. Nakamura (1994)
Oligopoly and the incentive for horizontal merger
M. K. Perry (1985)
10.2307/2534612
The Transformation of the U.S. Banking Industry: What a Long, Strange Trip It's Been
A. Berger (1995)
10.1023/A:1007760924829
The Effects of Megamergers on Efficiency and Prices: Evidence from a Bank Profit Function
J. Akhavein (1997)
10.2139/SSRN.36644
Small Business Lending By Banks Involved in Mergers
Nicholas A. Walraven (1997)
10.1086/262015
Optimal Debt Structure and the Number of Creditors
P. Bolton (1996)
10.2139/SSRN.41964
The Effects of Bank Mergers and Acquisitions on Small Business Lending
A. Berger (1997)
10.2139/ssrn.313832
Banking Market Structure, Financial Dependence and Growth: International Evidence from Industry Data
Nicola Cetorelli (1999)
10.2139/SSRN.300702
Cookie-Cutter Versus Character: The Micro Structure of Small Business Lending by Large and Small Banks
R. A. Cole (1997)
Mergers and Market Power: Evidence from the Airline Industry
E. H. Kim (1993)
10.2307/1926975
The Price-Concentration Relationship in Banking
A. Berger (1987)
10.1111/1467-6451.00082
Do Substantial Horizontal Mergers Generate Significant Price Effects? Evidence From The Banking Industry
Robin A. Prager (1998)
10.1111/J.1540-6261.1994.TB04418.X
The Benefits of Lending Relationships: Evidence from Small Business Data
M. Petersen (1994)
10.1353/mcb.2002.0054
Why Do Banks Merge?
D. Focarelli (2002)
10.1111/0022-1082.00243
Multiple versus Single Banking Relationships: Theory and Evidence
E. Detragiache (2000)
10.1007/978-1-349-15486-9_7
Economies as an Anti-Trust Defense: The Welfare Tradeoffs
O. Williamson (1972)
10.1111/0022-1082.25448
Why Do Companies Go Public? An Empirical Analysis
M. Pagano (1995)



This paper is referenced by
Impact of Mergers and Acquisition ( MA ) on performance of Ghana ’ s banking industry
K. A. Salami (2015)
LENDING RELATIONSHIPS AND BANK MERGERS AND ACQUISITIONS
OVE REIN (2010)
10.2139/ssrn.2006485
Competition, Loan Rates and Information Dispersion in Microcredit Markets
Guillermo Baquero (2012)
3. ECONOMIC GROWTH NEXUS TO PERFORMANCE OF BANKING SECTOR IN PAKISTAN
K. R. Pillai (2011)
10.1016/J.JINTECO.2018.03.001
The heterogeneous response of domestic sales and exports to bank credit shocks
Inés Buono (2018)
Integration and consolidation in EU banking - an unfinished business
Christoph Walkner (2005)
10.1016/J.JCORPFIN.2018.07.005
Keep Walking? Geographical Proximity, Religion, and Relationship Banking
T. Beck (2019)
Advantages to Size in Banking: The Price and Management of Reserves 1
F. Fecht (2007)
10.2139/SSRN.926337
Bank Competition, Agency Costs, and the Performance of the Monetary Policy
L. Alencar (2004)
10.2139/SSRN.314877
Credit rationing, customer relationship and the number of banks: an empirical analysis
E. D. Bodt (2002)
10.2139/ssrn.1548828
From Competition to Cartel: Bank Mergers in the U.K. 1885 to 1925
Lyndon Moore (2011)
10.2139/ssrn.303381
What Do State-Owned Firms Maximize? Evidence from Italian Banks
P. Sapienza (2002)
The Effects on Firm Borrowing Costs of Bank M&As
Fabián Duarte (2005)
E-FINANCE : AN INTRODUCTION Franklin Allen University of Pennsylvania
James Mcandrews (2001)
10.1080/08276331.2008.10593434
Market Share, Scale, and Market Value: An Empirical Study of Small Closely Held Manufacturing Firms
Craig S. Galbraith (2008)
10.1433/13540
Assetti proprietari delle banche e attivita' economica: possiamo affidarci a Coase?
A. Zazzaro (2004)
Mergers with Product Market Risk 1
Albert Banal-Estañol (2004)
MERGER ANALYSIS IN THE BANKING INDUSTRY: THE MORTGAGE LOANS AND THE SHORT TERM CORPORATE CREDIT MARKETS
D. Brito (2008)
10.2139/SSRN.1917292
Using Bank Mergers and Acquisitions to Understand Lending Relationships
O. Hetland (2011)
10.2139/ssrn.1641305
Counterfactual Analysis of Bank Mergers
P. Barros (2010)
10.1007/978-3-642-02821-2_5
The Economics of Banking Antitrust
David D. Vanhoose (2010)
10.1080/00036846.2019.1616067
Effects of main bank switching on new business bankruptcy
Yuta Ogane (2019)
10.2139/ssrn.874946
The Effects of Bank Switching: Firm Level Evidence from Finnish Small and Micro Firms
J. Niskanen (2005)
10.1353/pfs.2000.0001
Globalization of Financial Institutions: Evidence from Cross-Border Banking Performance
A. Berger (2000)
Economic and Financial Report 2008 / 01 RELATIONSHIP LENDING – EMPIRICAL EVIDENCE FOR GERMANY
Christoph Memmel (2008)
10.2139/ssrn.1153326
Investment-Cash Flow Sensitivities, Credit Rationing and Financing Constraints
L. Becchetti (2008)
The effects of consolidation on efficiency, competition and credit flows
(2001)
Banks, Regions and Development
P. Alessandrini (2003)
10.1007/S11187-003-6452-X
Liquidity Constraint on the Production of Firms in Southern Italy
D. Sarno (2005)
10.1016/j.jcorpfin.2019.101519
Bank regulatory size thresholds, merger and acquisition behavior, and small business lending
Shradha Bindal (2020)
10.1016/J.JBANKFIN.2014.03.004
The effect on competition of banking sector consolidation following the financial crisis of 2008
Carlos Pérez Montes (2014)
10.5089/9781484354728.001
Competition Policy for Modern Banks
L. Ratnovski (2013)
See more
Semantic Scholar Logo Some data provided by SemanticScholar