Long Term Effects of Bank Acquisitions in Central and Eastern Europe

37 Pages Posted: 23 Aug 2007 Last revised: 12 Nov 2007

See all articles by Markus Fritsch

Markus Fritsch

Goethe University Frankfurt - Chair of Banking and Finance

Date Written: August 20, 2007

Abstract

We study the long term effects on the target banks of 84 bank acquisitions in 17 countries in Central and Eastern Europe and the Commonwealth of Independent States. Applying median difference tests we analyse the post merger gains in profitability and cost efficiency as well the expansion of the loan portfolios. Though the absolute values of profitability and efficiency of the target banks three years after the acquisition do not differ from those of domestic banks not involved in M&A activities, the improvements in performance and loan growth are significantly better in the post merger phase. Furthermore we investigate determinates explaining the individual changes of the target banks' characteristics. In contrast to prior research we can not confirm that western acquirer achieve a better post merger performance than domestic acquirer. Performance improvements are strictly positively related to the cost efficiency and profitability of the acquirer. Loan growth after the acquisition is mainly driven by country specific factors. Large acquirers from western countries with a strong economy seem to invest in targets located in nations with a high GDP growth and low corporate income tax rates.

Keywords: Eastern European banks, bank mergers

JEL Classification: G24, G21, G34

Suggested Citation

Fritsch, Markus, Long Term Effects of Bank Acquisitions in Central and Eastern Europe (August 20, 2007). Available at SSRN: https://ssrn.com/abstract=1008838 or http://dx.doi.org/10.2139/ssrn.1008838

Markus Fritsch (Contact Author)

Goethe University Frankfurt - Chair of Banking and Finance ( email )

Mertonstr. 17
P.O. Box 11932
60054 Frankfurt (Main)
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
700
Abstract Views
3,511
rank
53,283
PlumX Metrics