Bank mergers, competition and liquidity

  • We model the impact of bank mergers on loan competition, reserve holdings and aggregate liquidity. A merger changes the distribution of liquidity shocks and creates an internal money market, leading to financial cost efficiencies and more precise estimates of liquidity needs. The merged banks may increase their reserve holdings through an internalization effect or decrease them because of a diversification effect. The merger also affects loan market competition, which in turn modifies the distribution of bank sizes and aggregate liquidity needs. Mergers among large banks tend to increase aggregate liquidity needs and thus the public provision of liquidity through monetary operations of the central bank. Klassifikation: D43, G21, G28, L13

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Author:Elena CarlettiGND, Philipp Hartmann, Giancarlo Spagnolo
Parent Title (German):Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2006,08
Series (Serial Number):CFS working paper series (2006, 08)
Document Type:Working Paper
Year of Completion:2006
Year of first Publication:2006
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2006/05/04
Tag:bank seserves; banking system liquidity; credit market competition; internal money market; monetary operations
GND Keyword:Industriestaaten; Bank; Kapitalkonzentration; Konzentration <Wirtschaft>; Unternehmenskonzentration; Bankenliquidität; Kreditmarkt; Wettbewerb; Wettbewerbsfreiheit; Wettbewerbsfähigkeit
Institutes:Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Licence (German):License LogoDeutsches Urheberrecht