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CFS Working Paper Series, Universität Frankfurt a. M. >
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http://hdl.handle.net/10419/25474
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| Title: | | Bank mergers, competition and liquidity  |
| Authors: | | Carletti, Elena Hartmann, Philipp Spagnolo, Giancarlo |
| Issue Date: | | 2006 |
| Series/Report no.: | | CFS Working Paper 2006/08 |
| Abstract: | | 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. |
| Subjects: | | Credit Market Competition Bank Reserves Internal Money Market Banking System Liquidity Monetary Operations |
| JEL: | | D43 G21 G28 L13 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CFS Working Paper Series, Universität Frankfurt a. M.
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