Cross-Border Takeovers and Efficiency of Acquired Banks in Transition Economies: An Observational Study on Ukraine

41 Pages Posted: 1 Oct 2011

See all articles by Muzaffar Olimjonovich Ahunov

Muzaffar Olimjonovich Ahunov

Endicott College, Woosong University

Leo Van Hove

Vrije Universiteit Brussel (VUB)

Marc Jegers

Free University of Brussels (VUB) - Micro-Economics for Profit and Non Profit Sector (MICE)

Date Written: September 29, 2011

Abstract

We investigate the impact of cross-border takeovers on target banks’ profitability, efficiency, and market share in Ukraine, an exemplar of a country with poor institutional quality. We rely on a combination of propensity score matching with the difference-in-difference methodology, and our main contribution lies in an additional sensitivity analysis that checks for the presence of temporary unobservable factors. Our results show that foreign investors have acquired Ukrainian banks with average efficiency and profitability, and that these indicators did not change significantly post-takeover. By contrast, foreign banks have targeted mainly large banks, and during the first two years following acquisition the targets’ loan market share and size even increased, whereas funding costs decreased effects that are robust for the presence of temporary unobservable factors. In line with Lanine and Vander Vennet (2007), we thus find that foreign banks are interested in increasing their market share rather than exporting their efficiency.

Keywords: cross-border takeovers, bank performance, selection bias, hidden bias

JEL Classification: G15, G21, G34, F36

Suggested Citation

Ahunov, Muzaffar Olimjonovich and Van Hove, Leo and Jegers, Marc, Cross-Border Takeovers and Efficiency of Acquired Banks in Transition Economies: An Observational Study on Ukraine (September 29, 2011). Available at SSRN: https://ssrn.com/abstract=1935497 or http://dx.doi.org/10.2139/ssrn.1935497

Muzaffar Olimjonovich Ahunov (Contact Author)

Endicott College, Woosong University ( email )

27 Baengnyong-ro 57beon-gil
Jayang-dong, Daejeon
Korea, Republic of (South Korea)

Leo Van Hove

Vrije Universiteit Brussel (VUB) ( email )

Department of Applied Economics (APEC)
Pleinlaan 5
Brussels, B-1050
Belgium
+32 2 614 84 49 (Phone)

HOME PAGE: http://research.vub.ac.be/applied-economics/members

Marc Jegers

Free University of Brussels (VUB) - Micro-Economics for Profit and Non Profit Sector (MICE) ( email )

Brussels
Belgium
+32-2-629 21 13 (Phone)
+32-2-629 22 82 (Fax)

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