Aldo Gonzalez

Dollarization, Foreign Ownership, and Competition in the Banking Industry in Latin America

ABSTRACT We estimate the correlation of foreign bank penetration and dollarization with competition in the banking industry in sixteen Latin American countries during the period 1995–2008. We apply Boone’s methodology to compute the intensity of competition. Our results suggest that in countries with an initial low level of competition, foreign ownership tends to foster rivalry among banks, whereas the opposite is true in countries with an initial high level of competition. The adoption of dollarization or a currency board, which reduces transaction costs and facilitates financial integration, has a positive correlation with competition. This is the case for Ecuador, El Salvador, and Argentina.

Optimal Pre-Merger Notification Mechanisms : Incentives and Efficiency of Mandatory and Voluntary Schemes

The authors compare the two merger control systems currently employed worldwide: a mandatory system based on merger size threshold and a voluntary system with ex-post monitoring and fines. The voluntary system possesses two informational advantages: (i) the enforcement agency employs more information -verifiable and non verifiable parameters- to decide the set of mergers to investigate, and (ii) the first move of merging firms reveals useful information to the agency about the competitive risk of a merger. If fines for undue omission to notify are upward limited, then a mixed mechanism is optimal, where small transactions are under a voluntary regime while the big mergers are obliged to report. Remedies for fixing anticompetitive mergers act as an instrument that induces firms to notify the operation, improving further the advantage of the voluntary mechanism.