Document Type
Article
Publication Date
5-6-2024
Abstract
The U.S. banking sector had nearly 70% fewer banks in 2022 relative to 1989, primarily because of mergers. We develop a methodology to estimate cross-market spillover effects of bank mergers and test whether the operations of incumbents facing consolidating competitors in one market are affected in other markets. We find that nonmerging banks within a market that are one standard deviation more exposed to mergers in other markets increase deposits by 2.1% relative to their less exposed competitors. Our methodology may be applied elsewhere to assess the aggregate impacts of industry consolidation and illustrates challenges with product-based or geographic market definitions.
Recommended Citation
Andrew Bird, Ding Du, Stephen A Karolyi, Cross-Market Effects of Consolidation: Evidence from Banking, The Review of Corporate Finance Studies, 2024;, cfae012, https://doi.org/10.1093/rcfs/cfae012
Peer Reviewed
1
Copyright
This work is written by (a) US Government employee(s) and is in the public domain in the US.
Included in
Business Administration, Management, and Operations Commons, Finance and Financial Management Commons, Other Business Commons
Comments
This article was originally published in The Review of Corporate Finance Studies in 2024. https://doi.org/10.1093/rcfs/cfae012