Emerging Countries, Mergers and Acquisitions, Bank Efficiency

Du, K and Sim, N 2016, 'Emerging Countries, Mergers and Acquisitions, Bank Efficiency', Research in International Business and Finance, vol. 36, pp. 499-510.

Document type: Journal Article
Collection: Journal Articles

Title Emerging Countries, Mergers and Acquisitions, Bank Efficiency
Author(s) Du, K
Sim, N
Year 2016
Journal name Research in International Business and Finance
Volume number 36
Start page 499
End page 510
Total pages 12
Publisher Elsevier Inc.
Abstract In emerging countries, bank mergers and acquisitions (M&A) are frequently motivated by the objective of promoting stability in the banking industry. However, the evidence that M&A can lead to better performing banks is tenuous at best. In this article, we investigate if this tenuous relationship could be due to the treatment of target and acquiring banks as the same type in empirical analysis, which overlooks the possibility that M&A may affect these banks differently. Using panel data on six emerging countries, our results confirm that the effect of M&A is generally weak except when our regressions are implemented separately for target and acquiring banks. For the latter, we find that target banks tend to be more efficient after an M&A but no efficiency improvements are found for acquiring banks. These results suggest that in emerging countries, bank M&A can lead to efficiency improvements for the combined entity, although target banks are mainly the ones to benefit from it. They also highlight the importance of distinguishing between target and acquiring banks so as to obtain sharper estimates of how M&A might affect bank performance.
Subject Financial Economics
Econometric and Statistical Methods
Financial Institutions (incl. Banking)
Keyword(s) Emerging countries
Mergers and acquisitions
Bank efficiency
DOI - identifier 10.1016/j.ribaf.2015.10.005
Copyright notice © 2015 Elsevier B.V. All rights reserved.
ISSN 0275-5319
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