The Safety and Soundness Effects of Bank M&As in the EU: Does Prudential Regulation Have Any Impact?

50 Pages Posted: 11 Oct 2012

See all articles by Jens Hagendorff

Jens Hagendorff

University of Edinburgh - Business School

Maria Nieto

Banco de España

Larry D. Wall

Federal Reserve Bank of Atlanta - Research Department

Date Written: October 10, 2012

Abstract

This paper studies the impact of European bank mergers and acquisitions on changes in key safety and soundness measures of both acquirers and targets. We find that capitalization, profitability and liquidity show signs of statistically and economically significant mean reversion for acquirers. Also, acquirers in cross-border deals tended to perform better when their home country prudential supervisors and deposit insurance funding systems were stricter than the target‘s. For target banks, the most consistent findings from the cross-sectional regressions are that stronger supervision and tougher deposit insurance funding regimes tend to result in positive post-merger changes in liquidity and performance.

Keywords: banks, mergers, Europe

JEL Classification: G21, G34, G28

Suggested Citation

Hagendorff, Jens and Nieto, Maria J. and Wall, Larry D., The Safety and Soundness Effects of Bank M&As in the EU: Does Prudential Regulation Have Any Impact? (October 10, 2012). Banco de Espana Working Paper No. 1236. Available at SSRN: https://ssrn.com/abstract=2159673 or http://dx.doi.org/10.2139/ssrn.2159673

Jens Hagendorff (Contact Author)

University of Edinburgh - Business School ( email )

University of Edinburgh
29 Buccleuch Place
Edinburgh, Scotland EH8 9JS
UNITED KINGDOM

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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