The Impact of M&As on Bank Risk in Spain (1986-2007)

Revista de Estabilidad Financiera, Número 25, Noviembre de 2013

13 Pages Posted: 25 Aug 2017

See all articles by Santiago Carbo-Valverde

Santiago Carbo-Valverde

Bangor Business School; Universidad Complutense de Madrid (UCM) - Colegio Universitario de Estudios Financieros (CUNEF)

Jens Hagendorff

University of Edinburgh - Business School

Maria Nieto

Banco de España

Date Written: November 20, 2013

Abstract

There is a paucity of research on the impact of domestic M&As on bank risk profiles. This paper exploits a rich database of Spanish banks during 1986-2010 to study the changes in bank risk profiles immediately before and after domestic M&As. Our results control for potential selection bias and show that, for acquiring banks, size and capitalization are important drivers of risk exposure before and after M&As. We find that target banks that received financial support from the government in the context of M&As showed a statistically significant increase in risk-taking before but not after a deal. Overall, our results indicate that bank size, leverage and government support have not caused banks to engage in additional risk-taking via M&As. However, changes to banks' funding and income mix are linked to higher risk-taking.

Keywords: Banks; Mergers; Spain

JEL Classification: G21; G34

Suggested Citation

Carbo-Valverde, Santiago and Hagendorff, Jens and Nieto, Maria J., The Impact of M&As on Bank Risk in Spain (1986-2007) (November 20, 2013). Revista de Estabilidad Financiera, Número 25, Noviembre de 2013 . Available at SSRN: https://ssrn.com/abstract=3024145 or http://dx.doi.org/10.2139/ssrn.3024145

Santiago Carbo-Valverde

Bangor Business School ( email )

Bangor Business School
College Road
Gwynedd LL57 2DG, Wales LL57 2DG
United Kingdom

Universidad Complutense de Madrid (UCM) - Colegio Universitario de Estudios Financieros (CUNEF) ( email )

Serrano Anguita 9
Madrid, Madrid 28004
Spain

Jens Hagendorff

University of Edinburgh - Business School ( email )

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

Maria J. Nieto (Contact Author)

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

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