Determinants of Domestic and Cross-Border Bank Acquisitions in the European Union

Journal of Banking and Finance, Forthcoming

Federal Reserve Bank of Atlanta Working Paper No. 2008-26

37 Pages Posted: 13 Jan 2009

See all articles by Ignacio Hernando

Ignacio Hernando

Banco de España

Maria Nieto

Banco de España

Larry D. Wall

Federal Reserve Bank of Atlanta - Research Department

Multiple version iconThere are 2 versions of this paper

Date Written: December 2008

Abstract

This paper analyzes the determinants of bank acquisitions both within and across 25 members of the European Union (EU-25) during the period 1997-2004. Our results suggest that poorly managed banks (those with a high cost-to-income ratio) and larger banks are more likely to be acquired by other banks in the same country. The probability of being a target in a cross-border deal is larger for banks that are quoted in the stock market. Finally, banks operating in more concentrated markets are less likely to be acquired by other banks in the same country but are more likely to be acquired by banks in other EU-25 countries.

Keywords: bank acquisitions, merger gains, probability of acquisition

JEL Classification: G21, G34

Suggested Citation

Hernando, Ignacio and Nieto, Maria J. and Wall, Larry D., Determinants of Domestic and Cross-Border Bank Acquisitions in the European Union (December 2008). Journal of Banking and Finance, Forthcoming; Federal Reserve Bank of Atlanta Working Paper No. 2008-26. Available at SSRN: https://ssrn.com/abstract=1319421

Ignacio Hernando (Contact Author)

Banco de España ( email )

Madrid 28014
Spain
+34 91 338 5186 (Phone)
+34 91 338 5678 (Fax)

Maria J. Nieto

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Larry D. Wall

Federal Reserve Bank of Atlanta - Research Department ( email )

1000 Peachtree Street, NE
Atlanta, GA 30309-4470
United States
404-498-8937 (Phone)
404-498-8956 (Fax)

HOME PAGE: http://www.frbatlanta.org/econ_rd/bios/wall.htm

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