How do bank mergers affect monetary policy by fluctuating bank credit market size

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We analyze how do bank mergers affect bank credit market size when the central bank cuts policy interest rate or eases quantitatively. We assume that financial restraint is not binding for all banks in money market. The bank merger reduces sum of expanding bank credit when central bank cuts policy interest rate. For quantitative easing, the bank merger reduces sum of expanding bank credit when targets of this policy are merging banks, and it increases sum of expanding bank credit when targets of this policy are no merging banks. Because merging banks reduce their credits but no merging banks increase their credits as strategic substitute.