Swap contracts have grown tremendously in the last decade. Most are interest-rate swaps, the simplest being an exchange of one party’s fixed-rate interest payments for another’s floating-rate payments. Swaps can lower borrowing costs for both parties as well as provide a tool for managing...

The authors analyze the effect of bank mergers on deposit interest rates, using data on banks responding to the Federal Reserve's Monthly Survey of Selected Deposits over an 11-year period. Their results suggest that banks exercise market power in pricing money market deposits and CD's in their...