Citation

Discussion Paper Details

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Full Details

Title: The Impacts of Stricter Merger Legislation on Bank Mergers and Acquisitions: Too-Big-To-Fail and Competition

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

Publication Date: February 2020

Keyword(s): Antitrust, banks, Merger Control, mergers and acquisitions and regulation

Programme Area(s): Financial Economics and Industrial Organization

Abstract: The effect of regulations on the banking sector is a key question for financial intermediation. This paper provides evidence that merger control regulation, although not directly targeted at the banking sector, has substantial economic effects on bank mergers. Based on an extensive sample of European countries, we show that target announcement premia increased by up to 16 percentage points for mergers involving control shifts after changes in merger legislation, consistent with a market expectation of increased profitability. These effects go hand-in-hand with a reduction in the propensity for mergers to create banks that are too-big-to-fail in their country.

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Bibliographic Reference

Carletti, E, Ongena, S, Siedlarek, J and Spagnolo, G. 2020. 'The Impacts of Stricter Merger Legislation on Bank Mergers and Acquisitions: Too-Big-To-Fail and Competition'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=14449