Bank Concentration and Product Market Competition

Farzad Saidi*, Daniel Streitz

*Corresponding author af dette arbejde

Publikation: Bidrag til tidsskriftTidsskriftartikelpeer review

Abstrakt

This paper documents a link between bank concentration and markups in nonfinancial sectors. We exploit concentration-increasing bank mergers and variation in banks’ market shares across industries and show that higher credit concentration is associated with higher markups and that high-market-share lenders charge lower loan rates. We argue that this is due to the greater incidence of competing firms sharing common lenders that induce less aggressive product market behavior among their borrowers, thereby internalizing potential adverse effects of higher rates. Consistent with our conjecture, the effect is stronger in industries with competition in strategic substitutes where negative product
market externalities are greatest.
OriginalsprogEngelsk
TidsskriftReview of Financial Studies
Vol/bind34
Udgave nummer10
Sider (fra-til)4999-5035
Antal sider37
ISSN0893-9454
DOI
StatusUdgivet - okt. 2021

Bibliografisk note

Published online: 30. January 2021

Citationsformater