Analysing the Motives and the Outcomes of Bank Mergers

Awdeh, Ali and EL-Moussawi, Chawki (2011): Analysing the Motives and the Outcomes of Bank Mergers. Published in: Middle Eastern Finance and Economics No. 15 (2011): pp. 6-20.

Abstract

We have examined in this study the bank mergers experience in Lebanon. Between 1994 and 2002, 25 bank merger operations took place. Firstly, we have compared the characteristics of acquiring and acquired banks, in order to identify the differences between the two groups of banks. Secondly, we have detected the changes in performance associated with these mergers. Our empirical results show a significant differences between the two categories in terms of profitability (ROE and NIM), in traditional cost measures (cost-to-income and staff expenses), in favour of acquiring banks. Besides, acquiring banks have been larger (in terms of assets), with better risk profile. However, no significant difference in productive efficiency was observed. The comparison of the performance measures of banks before and after the takeover, show a slight improvement in profitability, efficiency, with some deterioration in productive efficiency and considerable increase in credit risk.

• Item Type: MPRA Paper
• Language: English
• Keywords: Mergers; Acquisitions; Bank performance; Industry consolidation.
• Subjects: E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages; G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers ; Acquisitions ; Restructuring ; Corporate Governance

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