The Impact of Merger Legislation on Bank Mergers

Elena Carletti (), Steven Ongena, Jan-Peter Siedlarek and Giancarlo Spagnolo

No 16-14R, Working Papers from Federal Reserve Bank of Cleveland

Abstract: We find that stricter merger control legislation increases abnormal announcement returns of targets in bank mergers by 7 percentage points. Analyzing potential explanations for this result, we document an increase in the pre-merger profitability of targets, a decrease in the size of acquirers, and a decreasing share of transactions in which banks are acquired by other banks. Other merger properties, including the size and risk profile of targets, the geographic overlap of merging banks, and the stock market response of rivals appear unaffected. The evidence suggests that the strengthening of merger control leads to more efficient and more competitive transactions.

Keywords: mergers and acquisitions; merger control; antitrust; banks (search for similar items in EconPapers)
JEL-codes: G21 G34 K21 L40 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2017-07-19
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-com and nep-law
Note: This is the first revision of a paper originally published in June of 2016.
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https://doi.org/10.26509/frbc-wp-201614r Full text (text/html)

Related works:
Working Paper: The Impact of Merger Legislation on Bank Mergers (2016)
Working Paper: The Impact of Merger Legislation on Bank Mergers (2016)
Working Paper: The Impact of Merger Legislation on Bank Mergers (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedcwq:161401

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DOI: 10.26509/frbc-wp-201614r

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