Size, Target Performance and European Bank Mergers and Acquisitions

During the 1990s, the banking sector experienced an important consolidation process in most developed countries, where mergers and acquisitions (M&As) between credit institutions reached unprecedented levels. Financial deregulation and technological progress have played an important role in this...

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Bibliographic Details
Published in:American journal of business 2008-04, Vol.23 (1), p.53-64
Main Authors: Sanfilippo Azofra, Sergio, Garcia Olalla, Myriam, Torre Olmo, Begoña
Format: Article
Language:English
Subjects:
Bank acquisitions & mergers
Banking industry
Banking sector
Cost control
Credit unions
Deregulation
Economies of scale
European credit institutions
Financial services
Hypotheses
Industrialized nations
Liberalization
Mergers and acquisitions
Studies
Technological change
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Summary:During the 1990s, the banking sector experienced an important consolidation process in most developed countries, where mergers and acquisitions (M&As) between credit institutions reached unprecedented levels. Financial deregulation and technological progress have played an important role in this process (Berger, Demsetz & Strahan 1999). These, among other factors, may have intensified the synergy derived from size and facilitated an improvement in the management of the acquired institutions. In order to evaluate the importance of these two factors, we carry out a multinomial logit analysis of the characteristics of continental European financial institutions prior to their participation in merger and/or acquisition operations between 1995 and 2001. Our results demonstrate that size is an important factor in mergers and acquisitions, but it is not clear that economies of scale are sought with these types of deals. In turn, improving the management of the acquired institutions has played an important role in this process.
ISSN:1935-519X
1935-5181
1935-5181
DOI:10.1108/19355181200800004