Sounder banks’ borrowers get burned in mergers
Bank mergers engineered to enhance stability appear to hurt the borrowers of the sounder banks involved in the mergers, new research from the Centre for Economic Policy Research (CEPR) reveals.
The analysis also shows that government recapitalisations result in positive abnormal returns for the clients of recapitalised banks. The research also finds that recapitalisations allow banks to extend larger loans to low- and high-quality firms alike, and that low-quality firms experience higher
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