Monopoly-creating bank consolidation?
Subtitle: the merger of Fleet and BankBoston
By: Charles W. Calomiris, Thanavut Pornrojnangkool.
Contributors: Pornrojnangkool, Thanavut.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 11351; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 11351.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: FleetBoston Financial Corp; Bank Boston Corp; Bank mergers -- Massachusetts -- Boston
Description: "The merger of Fleet and BankBoston in September 1999 resulted in a regional New England lending market in which only one large, universal bank remained.  We explore the extent to which that merger resulted in monopoly rents for the combined entity in some niches within the regional loan market.  For small- and medium-sized middle-market borrowers, prior to the merger, Fleet and BankBoston charged unusually low loan interest rates, reflecting their ability to realize economies of scope and scale.  After the merger, those cost savings were no longer passed on to medium-sized middle-market borrowers, which resulted in an increase in the average interest rate credit spreads to those borrowers of roughly one percent.  Small-sized middle-market borrowers (which continued to enjoy the advantage of loan market competition from remaining small banks) maintained their low spreads.  Our results suggest that it may be desirable for regulators to consider the concentration in lending markets in addition to deposit markets when evaluating mergers and structuring appropriate divestiture requirements"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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