Value creating mergers: British bank consolidation, 1885–1925

Fabio Braggion, Narly Dwarkasing, Lyndon Moore

Research output: Contribution to journalArticleResearchpeer-review

Abstract

The British banking sector had many small banks in the mid-nineteenth century. From around 1885 until the end of World War One there was a process of increasingly larger mergers between banks. By the end of the merger wave the English and Welsh market was highly concentrated, with only five major banks. News of a merger brought a persistent rise in the share prices of both the acquiring and the target bank (roughly 1% and 7%, respectively). Non-merging banks, especially those whose local market concentration rose because of the merger, saw their stock prices rise. Our findings suggest that the process of bank consolidation increased collusive behavior among merged banks, to the likely detriment of the consumer.

Original languageEnglish
Article number101422
Number of pages19
JournalExplorations in Economic History
DOIs
Publication statusAccepted/In press - 2021

Keywords

  • Banking
  • Great Britain
  • Mergers and acquisitions

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