Gains in Bank Mergers: Evidence from the Bond Markets

43 Pages Posted: 19 Feb 2003

See all articles by María Fabiana Penas

María Fabiana Penas

Universidad Torcuato Di Tella

Haluk Unal

University of Maryland - Robert H. Smith School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: July 2002

Abstract

This paper presents evidence that merging banks' bond adjusted returns are positive and significant in premerger and announcement months. Also, the acquiring banks' credit spreads on new debt issues are lower after the merger. Diversification and incremental size attained in the merger are significant determinants of the bond returns and the decline in credit spreads, after controlling for leverage and asset quality changes. Size effects are only significant for medium-size banks.

Keywords: bank mergers, bond markets, diversification, Too big to fail

JEL Classification: G21, G28, G34

Suggested Citation

Penas, María Fabiana and Unal, Haluk, Gains in Bank Mergers: Evidence from the Bond Markets (July 2002). Available at SSRN: https://ssrn.com/abstract=352700 or http://dx.doi.org/10.2139/ssrn.352700

María Fabiana Penas (Contact Author)

Universidad Torcuato Di Tella ( email )

Saenz Valiente 1010
C1428BIJ Buenos Aires
Argentina

Haluk Unal

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States
301-405-2256 (Phone)
301-405 0359 (Fax)

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