Financial consolidation and liquidity: prudential regulation and/or competition policy?

No 50, Working Paper Research from National Bank of Belgium

Abstract: A model of loan rate competition with liquidity provision by banks is used to study bank mergers. Both loan rate competition and liquidity needs are seen to be "localised" phenomena. This allows for tracing down the effects of particular types of bank mergers. As such, we contrast the effects of "revenue base enhancing" mergers with the effects of mergers "for market power". The optimal post merger loan rate and risk management decisions are derived. The fundamental trade-off between stability and efficiency is often present, indicating that the approval of bank mergers induces difficult policy choices.

Keywords: bank mergers; merger review process; liquidity; loan Rates (search for similar items in EconPapers)
JEL-codes: D43 G21 G28 L40 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2004-05
New Economics Papers: this item is included in nep-cfn and nep-fin
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.nbb.be/doc/ts/publications/wp/wp50en.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbb:reswpp:200405-6

Access Statistics for this paper

More papers in Working Paper Research from National Bank of Belgium Contact information at EDIRC.
Bibliographic data for series maintained by ().