TY  - JOUR
AU  - Carow,Kenneth A.
AU  - Kane,Edward J.
AU  - Narayanan,Rajesh
TI  - How Have Borrowers Fared in Banking Mega-Mergers?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10623
PY  - 2003
Y2  - July 2003
UR  - http://www.nber.org/papers/w10623
L1  - http://www.nber.org/papers/w10623.pdf
N1  - Author contact info:
Edward J. Kane
2325 E Calle Los Altos
Tucson, AZ 85718
Tel: 520-299-5066
E-Mail: edward.kane@bc.edu
AB  - Previous studies of event returns surrounding bank mergers show that banks gain value in megamergers and additional value when they absorb in-market competitors.  A portion of these gains has been traced to the increased bargaining power of banks vis-à-vis regulators and other competitors.  We demonstrate that increased bargaining power of megabanks adversely affects loan customers of the acquired institution. Wealth losses are greater when loan customers are credit-constrained, the loan customer is smaller, or the acquisition is an in-market deal.  These findings reinforce complaints that the ongoing consolidation in banking has unfavorably affected the availability of credit for smaller firms and especially capital-constrained firms.
ER  -