Impact of Recession on Bank Merger Valuation

Abstract

Consolidation of banks is driven by the objective of leveraging the synergies of geographical diversification, increased efficiency, cost savings and economies of scale. Being banking is an important component of the financial system; these structural changes can potentially have public policy implications. Valuation of banks and fixation of swap ratio are very important from the view of shareholders. The present study analyses the difference in the valuation approaches during normal and financial crisis period.

Keywords: Valuation, swap ratio, recession, bank acquisitions

JEL Classification: G34