Bank consolidation and the dynamics of consumer loan interest rates

Charles Kahn, George Pennacchi, Ben Sopranzetti

Research output: Contribution to journalArticlepeer-review


This paper analyzes interest rates quoted by individual banks for personal and automobile loans in 10 cities. Personal loan rates are higher in concentrated markets, and banks involved in mergers reduce personal rates relative to their competitors prior to the merger's completion. This is consistent with mergers changing the size structure of personal loan markets and merger participants' desire to gain regulatory approval. Auto rates are unaffected by local concentration and mergers, suggesting that their market is nationwide. Rates for both loan types respond asymmetrically to changes in Treasury rates, being more sensitive to a rise than a fall.
Original languageEnglish (US)
Pages (from-to)99-133
Number of pages35
JournalJournal of Business
Issue number1
StatePublished - Jan 2005

ASJC Scopus subject areas

  • Business and International Management
  • Economics and Econometrics
  • Statistics, Probability and Uncertainty


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