Mergers and Acquisitions in European banking higher productivity or better synergy among business lines?

• Published in: Journal of productivity analysis 2013-04, Vol.39 (2), p.165-175
• Main Authors: Ayadi, Rym, Boussemart, Jean-Philippe, Leleu, Hervé, Saidane, Dhafer
• Format: Article
• Language: English
• Subjects: 2010 Conference of the EURO Working Group on Efficiency and Productivity Analysis: "Global Trends in the Efficiency and Risk Management of Financial Services"; Accounting/Auditing; Acquisitions & mergers; Bank acquisitions & mergers; Bank assets; Bank loans; Banking industry; Banks; Best practice; Convergence; Cost efficiency; Econometrics; Economic efficiency; Economic models; Economic statistics; Economic theory; Economics; Economics and Finance; Efficiency; Efficiency metrics; Humanities and Social Sciences; Input output; Microeconomics; Operations Research/Decision Theory; Productive efficiency; Productivity; Stockholders; Studies; Value creation
• ISSN: 0895-562X; 1573-0441
• DOI: 10.1007/s11123-012-0309-8

This paper aims at assessing the extent to which M&As in European banking sector over the period 1996-2003 result in two simultaneous catching up and convergence processes of consolidating groups. First, do the M&As significantly contribute to the consolidating banks to catch-up with the productivity benchmark? Second, in terms of synergies or complementarities among business lines, is there a convergence process of output mixes among the individual banks of the M&A operations? Our sample is made up of 42 M&A transactions and 587 non-merging banks in Europe. The main conclusion is that M&A operations in the European banking industry appear to be essentially motivated by an objective of improving complementarities among lines of work from each component of M&As rather than increasing productivity at the merged banks.