Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
AI Tech Stocks State Going into the CRASH and Capitalising on the Metaverse - 25th Jan 22
Stock Market Relief Rally, Maybe? - 25th Jan 22
Why Gold’s Latest Rally Is Nothing to Get Excited About - 25th Jan 22
Gold Slides and Rebounds in 2022 - 25th Jan 22
Gold; a stellar picture - 25th Jan 22
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Bank and Building Society Mergers Can Spoil Your Savings

ConsumerWatch / UK Banking Aug 08, 2007 - 03:01 PM GMT

By: MoneyFacts

ConsumerWatch

UK bank and building society mergers do not benefit their customers, according to a new study. An analysis of UK bank and building society mergers has found that although these mergers have generated substantial efficiencies for the banks concerned these benefits have not been passed on to customers.


The study by the ESRC Centre for Competition Policy at the University of East Anglia found that while most merging institutions have benefited from mergers, interest rates for the bulk of banking customers remain unchanged. Indeed, savers who hold notice saving accounts with merging banks and building societies have suffered a decline in interest rates up to six years after a merger takes place.

Dr John Ashton and Dr Khac Pham examined 61 UK bank mergers occurring between 1988 and 2004. For each of these mergers, efficiency changes were recorded for individual banks and interest rate movements were recorded for savings accounts, mortgages and personal loans.

Data from Moneyfacts.co.uk was used to make these detailed interest rate comparisons. They found that merging banks improve their levels of efficiency up to six years after a merger, indicating that merging banks and building societies can provide banking services to their customers at a lower cost.

By contrast, in most cases the levels of interest paid to, or demanded from, customers shows no significant difference to the interest rates provided by banks and building societies, which have not merged. Of greater concern, customers holding notice savings accounts with merging banks have suffered a significant decline in interest rates relative to customers of banks and building societies which have not merged.

Commenting on the findings Dr Ashton said: “Retail banking customers gain little from bank mergers and in some cases can lose out from mergers. Consequently, the consumer perspective must be given more consideration when assessing the merits of future potential banks mergers.”

The findings indicate that while banks have obviously made beneficial merger decisions, these benefits are not shared with their savings, personal loan and mortgage customers. In some cases, such as notice saving accounts, mergers have actually led to worse interest rates for customers.

Notes

1. For further details, please contact John Ashton on 01603 591618, 07747 075993 or email j.ashton@uea.ac.uk. Alternatively, contact the University of East Anglia Press Office on 01603 593007.

2. The study, entitled Efficiency and Price Effects of Horizontal Bank Mergers by Dr John Ashton (Lecturer in Regulation from the Norwich Business School and the ESRC Centre for Competition Policy at the University of East Anglia) and Dr Khac Pham (Research Associate from the ESRC Centre for Competition Policy), provides an empirical assessment of the efficiency and interest rate changes occurring during 61 UK retail bank mergers. Key findings of the work include the general efficiency enhancing influence of influence of UK bank mergers and the limited effect of merger on retail interest rates. Furthermore, different banking products appear to be influenced differently by mergers. It is proposed that future assessments of bank competition and mergers require an accommodation of different types of bank customer.

3. The full text of the research study is available on the CCP website (http://www.ccp.uea.ac.uk/publicfiles/workingpapers/CCP07-9.pdf).

4. The Centre for Competition Policy (CCP) at the University of East Anglia is the leading UK centre for research into the economics and law of Competition Policy. Funded by the Economic and Social Research Council, its members undertake high quality, independent, academic research into competition and regulation and its impact on companies and society. CCP’s output is in the public domain.

5. The ESRC is the UK's largest funding agency for research and postgraduate training relating to social and economic issues. It provides independent, high quality, relevant research to business, the public sector and Government. The ESRC invests more than £123million every year in social science and at any time is supporting some 2,000 researchers in academic institutions and research policy institutes. It also funds postgraduate training within the social sciences to nurture the researchers of tomorrow. More at http://www.esrcsocietytoday.ac.uk

www.moneyfacts.co.uk - The Money Search Engine

Money Facts Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in