The effects of banking mergers on loan contracts

Research output: Contribution to journalArticlepeer-review

245 Scopus citations


This paper studies the effects of banking mergers on individual business borrowers. Using information on individual loan contracts between banks and companies, I analyze the effect of banking consolidation on banks' credit policies. I find that in-market mergers benefit borrowers if these mergers involve the acquisition of banks with small market shares. Interest rates charged by the consolidated banks decrease, but as the local market share of the acquired bank increases, the efficiency effect is offset by market power. Mergers have different distributional effects across borrowers. When banks become larger, they reduce the supply of loans to small borrowers.

Original languageEnglish (US)
Pages (from-to)329-367
Number of pages39
JournalJournal of Finance
Issue number1
StatePublished - Feb 2002

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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