Suchergebnisse

This Commentary discusses the implications of merger control policy on merger activity in the banking sector, drawing on an analysis of the European banking sector during a period in which stricter merger policies were being introduced. It identifies several changes to the bank mergers taking place after the introduction of the stricter policies that are consistent with higher expected returns for shareholders and more procompetitive transactions. The evidence suggests that the new merger policy was successful in preventing mergers that are excessively anticompetitive, while it also led to banks' finding mergers that are expected to deliver greater efficiency.

One potential threat to a stable financial system is the phenomenon of contagion, where a risk that is ordinarily small becomes a problem because of the way it spreads to other institutions. Researchers have investigated multiple channels through which contagion might occur. We look at two--banks borrowing from each other and banks holding similar types of assets--and argue that the latter is a potential source of systemic risk. We review recent data on asset concentrations and capitalization levels of the largest US banks and conclude that the overall risk from this particular contagion channel is at present likely limited.

Many models have been developed to forecast the spread of the COVID-19 virus. We present one that is enhanced to allow individuals to alter their behavior in response to the virus. We show how adding this feature to the model both changes the resulting forecast and informs our understanding of the appropriate policy response. We find that when left to their own devices, individuals do curb their social activity in the face of risk, but not as much as a government planner would. The planner fully internalizes the effect of all individuals' actions on others in society, while individuals do not. Further, our simulations suggest that government intervention may be particularly important in the middle and later stages of a pandemic.

We study the impact on bank merger activity of the strengthening in merger control legislation introduced in Europe between 1989 and 2004. We find that strengthening merger control increases the abnormal returns on bank target stocks in the days around the merger announcement by 7 percentage points relative to before the new legislation. We discuss several potential explanations for this effect of the change in legislation by studying changes in merger characteristics. We find a weak increase in the pre-merger profitability of target banks, a decrease in the size of acquirers and a decrease in the share of transactions in which banks are acquired by other banks. Other merger properties, including the size and risk profile of targets, the geographic overlap of merging banks and the stock market response of rival banks in the country appear unaffected. The evidence is consistent with legislation changes leading to transactions being undertaken that are more profitable and more pro-competitive.

Many of the models used to track, forecast, and inform the response to epidemics such as COVID-19 assume that everyone has an equal chance of encountering those who are infected with a disease. But this assumption does not reflect the fact that individuals interact mostly within much narrower groups. We argue that incorporating a network perspective, which accounts for patterns of real-world interactions, into epidemiological models provides useful insights into the spread of infectious diseases.

We compare two types of models used to predict the spread of the coronavirus, both of which have been used by government officials and agencies. We describe the nature of the difference between the two approaches and their advantages and limitations. We compare examples of each type of model—the University of Washington IHME or "Murray" model, which follows a curve-fitting approach, and the Ohio State University model, which follows a structural approach.