Working Paper: CEPR ID: DP14663
Authors: Fabio Braggion; Narly Dwarkasing; Lyndon Moore
Abstract: The British banking sector had many small banks in the mid-nineteenth century. From around 1885 until the end of World War One there was a process of increasingly larger mergers between banks. By the end of the merger wave the English and Welsh market was highly concentrated, with only five major banks. News of a merger brought a persistent rise in the share prices of both the acquiring and the target bank (roughly 1% and 7%, respectively). Non-merging banks, especially those whose local market concentration rose as a result of the merger, saw their stock prices rise.
Keywords: Great Britain; Banking; Mergers and Acquisitions
JEL Codes: G34; N23; N24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| merger announcements (G34) | expectations of future profitability (D84) |
| mergers facilitate collusive behavior (L12) | competition and consumer welfare (L49) |
| merger announcements (G34) | acquiring banks' stock prices (G21) |
| merger announcements (G34) | target banks' stock prices (G21) |
| merger announcements (G34) | rival banks' stock prices (E44) |
| merged banks (G21) | non-merging banks' performance (G21) |