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The economic impact of merger control legislation

Author

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  • Carletti, Elena
  • Hartmann, Philipp
  • Ongena, Steven
Abstract
We investigate the impact of legislative reforms in merger control legislation in nineteen industrial countries between 1987 and 2004. We find that strengthening merger control decreases the stock prices of non-financial firms, while increasing those of banks. Cross sectional regressions show that the discretion embedded in the supervisory control of bank mergers is a major determinant of the positive bank stock returns. One explanation is that merger control introduces “checks and balances” that mitigates the potential abuse and wasteful enforcement of supervisory control in the banking sector.

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  • Carletti, Elena & Hartmann, Philipp & Ongena, Steven, 2015. "The economic impact of merger control legislation," International Review of Law and Economics, Elsevier, vol. 42(C), pages 88-104.
    • Handle: RePEc:eee:irlaec:v:42:y:2015:i:c:p:88-104
    DOI: 10.1016/j.irle.2015.01.004
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    Cited by:

    1. Carletti, Elena & Ongena, Steven & Siedlarek, Jan-Peter & Spagnolo, Giancarlo, 2015. "The Impact of Merger Legislation on Bank Mergers," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 530, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    2. Boris Begović & Dušan Popović, 2019. "Merger Control and Economic Growth of LDCs: Some Observations and Recommendations," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 54(2), pages 381-408, March.
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    5. Svetlana B. Avdasheva & Dina V. Tsytsulina, 2014. "The Effects Of Competition Policy: Merger Approval, Entry Barrier Removal, Antitrust Enforcement Compared," HSE Working papers WP BRP 34/FE/2014, National Research University Higher School of Economics.
    6. Kick, Thomas & Pfingsten, Andreas, 2011. "The importance of qualitative risk assessment in banking supervision before and during the crisis," Discussion Paper Series 2: Banking and Financial Studies 2011,09, Deutsche Bundesbank.
    7. Patrice Bougette & Oliver Budzinski & Frédéric Marty, 2024. "Ex-ante versus Ex-post in Competition Law Enforcement: Blurred Boundaries and Economic Rationale," Working Papers halshs-04604840, HAL.
    8. Joaquín Maudos & Xavier Vives, 2019. "Competition Policy in Banking in the European Union," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 55(1), pages 27-46, August.
    9. Apergis, Nicholas & Dastidar, Sayantan Ghosh, 2024. "Local stock liquidity and local factors: Fresh evidence from US firms across states," Research in International Business and Finance, Elsevier, vol. 67(PA).
    10. Yuliya Demyanyk & Charlotte Ostergaard & Bent E. Sorensen, 2008. "Risk sharing and portfolio allocation in EMU," European Economy - Economic Papers 2008 - 2015 334, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.

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    More about this item

    Keywords

    Merger control; Legal institutions; Financial regulation;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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