Establishing banking market definitions through estimation of residual deposit supply equations

Article Abstract:

A novel procedure outlined in the Dept of Justice's Merger Guidelines was adopted to evaluate the importance of nonbank financial institutions on the performance of antitrust markets. The procedure actually works by assessing residual bank relationships, which is critical in determining the responsiveness of small-scale deposit funds to the level of interest rates levied to such deposits. Experimental results indicate that the estimated supply elasticities of savings accounts are relatively small, thereby, creating more than 5% reduction in deposit rates.

Economic aspects, Interest rates

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What should regulators do about merger policy?

Article Abstract:

Banking regulators in Europe, Japan and the US need to consider the unique needs of the banking sector in their respective countries in formulating merger policies. In the case of Japan, policymakers ought to focus on trying to attract foreign firms to buy local banks in need of capital. For Europe, the main task is to establish a system that promotes efficient consolidation once the single currency is adopted. US regulators, for their part, should continue their current policies regarding bank mergers.

Acquisitions & Mergers Analysis, Laws, regulations and rules, Acquisitions and mergers, Financial analysis

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