Bank Mergers in a Deregulated Environment: Promise and Peril

(Hardback)

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Deregulation in banking and finance may hold promise for consumers, but what actually seems to be developing is trouble. Large banks are combining into small clusters of mega-banks with national and global reach, supported by government safety nets premised on fears they are "too big to be allowed to fail". One result, among several, is that retail banking suffers. This work evaluates existing bank merger policy and offers workable proposals for new legislative actions that would enhance the benefits of bank mergers without exacerbating the weaknesses. The authors review the historical role of governments in protecting banks from competition, then the modern policy that promotes competition, and present a model to explain and highlight the problems that today's policies are causing. In the end they turn to their own research and conclude that while a special bank merger policy is still warranted, it needs to be adapted in ways that would rein in the trend toward bigness and soften the impact this has domestically and internationally.

Reviews

.,."offer a practical proposal for new legislative action that would enhance the benefits of bank mergers without exacerbating the weaknesses."-Business Horizons
...offer a practical proposal for new legislative action that would enhance the benefits of bank mergers without exacerbating the weaknesses.-Business Horizons
I think the Shull-Hanweck book deserves careful attention from policy makers and policy analysts. I highly recommend the book to anyone interested in bank competition issues and antitrust policy toward bank mergers. It is a reasoned and refreshing antidote to the pervasive deregulation mantra and blind adherence tp fre-market theory devoid of market imperfections that are prevalent in real-world markets.-The Antitrust Bulletin
..."offer a practical proposal for new legislative action that would enhance the benefits of bank mergers without exacerbating the weaknesses."-Business Horizons
"I think the Shull-Hanweck book deserves careful attention from policy makers and policy analysts. I highly recommend the book to anyone interested in bank competition issues and antitrust policy toward bank mergers. It is a reasoned and refreshing antidote to the pervasive deregulation mantra and blind adherence tp fre-market theory devoid of market imperfections that are prevalent in real-world markets."-The Antitrust Bulletin

Author Bio

BERNARD SHULL is Professor Emeritus in the Department of Economics Hunter College, and a special consultant for National Economic Research Associates (NERA). He has held various positions in the Federal Reserve System, including Associate Advisor to the Board of Governors, he was also Senior Economist in the Office of the Comptroller of the Currency. He has published widely in professional and academic journals on issues of monetary, banking, and financial policy, and is the co-author of two books, Interest Rate Volatility and Bank Mergers in a Deregulated Environment (Quorum, 2001). GERALD A. HANWECK is Professor of Finance in the School of Management, George Mason University. Dr. Hanweck has been a consultant to government agencies, an expert witness in litigation involving financial institutions and government agencies, and a visiting scholar with the Division of Insurance at the FDIC. He publishes extensively in the journals of his field and has co-authored one book, with Bernard Shull, on interest rate volatility.