Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/144264
Authors: 
Van Cayseele, Patrick
Year of Publication: 
2004
Series/Report no.: 
Working Paper Research 50
Abstract: 
A model of loan rate competition with liquidity provision by banks is used to study bank mergers. Both loan rate competition and liquidity needs are seen to be "localised" phenomena. This allows for tracing down the effects of particular types of bank mergers. As such, we contrast the effects of "revenue base enhancing" mergers with the effects of mergers "for market power". The optimal post merger loan rate and risk management decisions are derived. The fundamental trade-off between stability and efficiency is often present, indicating that the approval of bank mergers induces difficult policy choices.
Subjects: 
bank mergers
merger review process
liquidity
loan Rates
JEL: 
D43
G21
L40
G28
Document Type: 
Working Paper

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