Impact of mergers and acquisitions on Brazil's lending spread (1996-2021)
DOI:
https://doi.org/10.1590/1980-53575512anasKeywords:
Lending spread, Credit market, Efficiency, Market concentrationAbstract
Considering the credit market relevance for the economic development of a nation, this research aims to verify the impact of mergers and acquisitions in the Brazilian banking sector on the lending spread and the consequences for the country’s credit market between 1996 and 2021. To this end, we use the methodology of literature survey and descriptive econometric research. To determine the effect of mergers and acquisitions on the cost, credit availability in the Brazilian banking market, the effects on institutions’ size, operational efficiency and profitability, we employ a recent Differences-in-Differences approach for multiple treatment periods. The results suggest that despite the strong market concentration that occurred in the period, there was a decrease in interest margins charged by banks that participated in the treatment. Therefore, establishing a negative effect of mergers and acquisitions on the lending spread, confirm the hypothesis of efficiency gains before the Structure, conduct and Performance assumption. In general, banking firms that participated in a M&A process in the Brazilian banking market, during the period encompassed by the study, did not necessarily present greater market power and greater profitability, although the drop in margins charged may be offset by gains in efficiency.
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Funding data
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Coordenação de Aperfeiçoamento de Pessoal de Nível Superior
Grant numbers 001 -
Conselho Nacional de Desenvolvimento Científico e Tecnológico
Grant numbers 141106/2023-9
