Gauging the efficiency of bank consolidation during a merger wave
Article Abstract:
Panel or cross-sectional analyses of individual banks do not provide accurate measures of the efficiency gains from consolidation due to unique econometric pitfalls posed by mergers for event studies of stock returns and bank performance comparisons. In addition, market reactions to merger announcements may be inadequate measures of market perceptions about the efficiency of consolidation while counterfactual benchmarks of comparison are not easy to construct during a merger wave. Another problem with panel or cross-sectional analyses of banks is that bank performance is not a very reliable measure of economic efficiency during consolidation. What is needed is to put greater emphasis on cross-regime comparisons to obtain accurate measures of efficiency gains during bank merger waves.
Publication Name: Journal of Banking & Finance
Subject: Business
ISSN: 0378-4266
Year: 1999
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European lessons on consolidation in banking
Article Abstract:
The European experience in bank consolidation offers at best a few lessons to US banks. For one, bank mergers in Europe have a political dimension, as governments try to promote domestic mergers to protect domestic banks as well as national interests. European banks, for their part, strongly believe that strength at home is necessary for a successful expansion in foreign markets. That is why they invest in strategic options such as investment banking to boost their competitiveness in the domestic market. These trends in bank consolidation in Europe are not really instructive for US banks. Ironically, it may be assumed that bank mergers in the US may provide valuable lessons for European banks.
Publication Name: Journal of Banking & Finance
Subject: Business
ISSN: 0378-4266
Year: 1999
User Contributions:
Comment about this article or add new information about this topic:
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