Banking market consolidation in Asia: Evidence from acquirers, targets, and rivals
55 Pages Posted: 15 Jun 2016 Last revised: 7 Dec 2023
Date Written: December 1, 2023
Abstract
We analyze the financial sector consolidation in Asia by using a comprehensive sample of bank M&As from 1995 to 2021. Our results show that M&A announcements by Asian domestic ac-quirers are associated with significant positive stock price returns to both acquirers and their ri-vals. In contrast, cross-border acquirers and their rivals experience negative but insignificant re-turns, while targets and their rivals record gains, regardless whether it is a domestic or cross-border transaction. Further analyses reveal that domestic acquirers obtaining larger relative in-creases in their market share benefit the most, indicating that market power considerations are the primary driver behind acquirers' positive returns. For cross-border acquirers, neither cultural dif-ferences nor regulatory arbitrage considerations can explain return patterns surrounding M&A announcements.
Keywords: Mergers and acquisitions (M&As); Banks; Emerging markets; Rival market reactions; Market consolidation; Market power
JEL Classification: G14, G21, G34, F23
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