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Size, Target Performance and European Bank Mergers and Acquisitions

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 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. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Journal of Business Emerald Publishing

Size, Target Performance and European Bank Mergers and Acquisitions

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Publisher
Emerald Publishing
Copyright
Copyright © 2008 Emerald Group Publishing Limited. All rights reserved.
ISSN
1935-5181
DOI
10.1108/19355181200800004
Publisher site
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Abstract

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.

Journal

American Journal of Business – Emerald Publishing

Published: Jan 1, 2008

Keywords: Banking sector; European credit institutions; Mergers and acquisitions

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