TY  - JOUR
AU  - Calomiris,Charles W.
AU  - Pornrojnangkool,Thanavut
TI  - Monopoly-Creating Bank Consolidation? The Merger of Fleet and BankBoston
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11351
PY  - 2005
Y2  - May 2005
UR  - http://www.nber.org/papers/w11351
L1  - http://www.nber.org/papers/w11351.pdf
N1  - Author contact info:
Charles W. Calomiris
Graduate School of Business
Columbia University
3022 Broadway Street, Uris Hall
New York, NY 10027
Tel: 212/854-8748
Fax: 212/316-9219
E-Mail: cc374@columbia.edu

Thanavut Pornrojnangkool
The World Bank
1818 H Street, N.W.
Washington, DC  20433
E-Mail: BobbyTP@aol.com
AB  - The merger of Fleet and BankBoston in September 1999 resulted in a regional New England lending market in which only one large, universal bank remained. We explore the extent to which that merger resulted in monopoly rents for the combined entity in some niches within the regional loan market. For small- and medium-sized middle-market borrowers, prior to the merger, Fleet and BankBoston charged unusually low loan interest rates, reflecting their ability to realize economies of scope and scale. After the merger, those cost savings were no longer passed on to medium-sized middle-market borrowers, which resulted in an increase in the average interest rate credit spreads to those borrowers of roughly one percent. Small-sized middle-market borrowers (which continued to enjoy the advantage of loan market competition from remaining small banks) maintained their low spreads. Our results suggest that it may be desirable for regulators to consider the concentration in lending markets in addition to deposit markets when evaluating mergers and structuring appropriate divestiture requirements.
ER  -