The Effect of Bank Mergers on Loan Prices: Evidence from the U.S.

摘要: Bank mergers can increase or decrease loan spreads, depending on whether the increased market power outweighs efficiency gains. Using proprietary loan-level data for U.S. commercial banks, I find that, average, reduce with magnitude of reduction being larger when post-merger cost savings increase. My results suggest that relation between spreads and extent overlap merging banks is non-monotonic. Market increases consequently lowers but sufficiently large, increase, potentially due to market-power effect dominating savings. Furthermore, average in significant small businesses.