Mergers in financial services and overlending

  1. David Peón 1
  2. Manel Antelo 2
  1. 1 Universidade da Coruña
    info

    Universidade da Coruña

    La Coruña, España

    ROR https://ror.org/01qckj285

  2. 2 Universidade de Santiago de Compostela
    info

    Universidade de Santiago de Compostela

    Santiago de Compostela, España

    ROR https://ror.org/030eybx10

Journal:
Cuadernos de economía: Spanish Journal of Economics and Finance

ISSN: 2340-6704,  0210-0266

Year of publication: 2018

Volume: 41

Issue: 116

Pages: 167-180

Type: Article

DOI: 10.32826/CUDE.V42I116.80 DIALNET GOOGLE SCHOLAR lock_openBiblos-e Archivo editor

More publications in: Cuadernos de economía: Spanish Journal of Economics and Finance

Abstract

In this paper we build a model of banking competition that considers a manageri-al-overconfidence setup resulting in two main findings. First, a merger between rational banks may change their behaviour in that, in post-merger conditions, they would follow the over-confident bank when they would not have done so pre-merger, thereby amplifying the credit boom. Second, the results overcome the merger paradox, in the sense that the merger would be profitable for participants and thus intrinsically stable.

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Funding information

The authors gratefully acknowledge the financial support received from the Xunta de Galicia (Spain) through Research Project ED431B2016/001 Consolidación e estruturación – 2016 GPC GI-2016 Análise económica dos mercados e institucións. This research has also received the funding of the Program for the “Consolidation and Structuring of Competitive Research Units - Research Networks (Redes de Investigación)” (Ref. ED341D R2016/014), Proxectos Plan Galego IDT, from the Xunta de Galicia (Spain).

Funders

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Data source: Dialnet