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The Economic Efficacy of Banking Mergers: 2006-2008

Colorado College Working Paper No. 2012-06

7 Pages Posted: 20 May 2012  

Rachel Vitale

Colorado College - Department of Economics and Business

Judith A. Laux

Colorado College - Department of Economics and Business

Date Written: May 19, 2012

Abstract

The most recent financial crisis has spurred a number of mergers and acquisitions in the financial industry, specifically banks. This study examines the hypothesis that mergers and acquisitions did not produce better performing institutions and industries during the 2006 to 2008 period. Data were compiled for six accounting-based ratios for 105 firms directly involved in mergers or acquisitions during this period. An empirical comparison of both firm-to-firm and firm-to-industry performance shows that firms did not benefit from the mergers for the majority of ratios tested. On the whole, these results reveal the inefficiencies of mergers and acquisitions, supporting the hypothesis of this study.

Keywords: Mergers and Acquisitions, Financial Industry, Banks, Accounting-Based Ratios

JEL Classification: G21, G34, L25, M41

Suggested Citation

Vitale, Rachel and Laux, Judith A., The Economic Efficacy of Banking Mergers: 2006-2008 (May 19, 2012). Colorado College Working Paper No. 2012-06. Available at SSRN: https://ssrn.com/abstract=2062897 or http://dx.doi.org/10.2139/ssrn.2062897

Rachel Vitale

Colorado College - Department of Economics and Business ( email )

14 E Cache La Poudre Street
Colorado Springs, CO 80903
United States

Judith A. Laux (Contact Author)

Colorado College - Department of Economics and Business ( email )

14 E Cache La Poudre Street
Colorado Springs, CO 80903
United States
7193896414 (Phone)
7193896927 (Fax)

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