Value Creation in European Bank M&As

42 Pages Posted: 5 May 2023

See all articles by Emmanouil G. Pyrgiotakis

Emmanouil G. Pyrgiotakis

University of Essex - Essex Business School

Alexandros Kontonikas

University of Essex

George N. Leledakis

Athens University of Economics and Business, School of Business, Department of Accounting and Finance

NICKOLAOS TRAVLOS

University of Surrey

Abstract

In this paper, we provide novel evidence of shareholder value creation in European bank M&As. We show that since 2009, bidders realize approximately 3% higher abnormal returns compared to the previous years; the returns being accompanied by significant improvements in long-term profitability. The main source of this improved performance is linked to market power exploitation, as captured by higher net interest margins. These findings are linked to the structural changes, in the form of increased market concentration and decreased competition, that have occurred in the European banking markets since 2009. We show and argue that these results are unique to Europe due to the region’s exposure to twin-crises, the differences in policy response, and the substantial increase in concentration in the post-2008 period compared to other markets, such as the U.S. and the Central and Eastern Europe. The results preserve after a series of robustness and endogeneity checks.

Keywords: Bank mergers and acquisitions, market concentration, competition, event study, long-term merger performance

Suggested Citation

Pyrgiotakis, Emmanouil G. and Kontonikas, Alexandros and Leledakis, George N. and TRAVLOS, NICKOLAOS, Value Creation in European Bank M&As. Available at SSRN: https://ssrn.com/abstract=4439469 or http://dx.doi.org/10.2139/ssrn.4439469

Emmanouil G. Pyrgiotakis (Contact Author)

University of Essex - Essex Business School ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

Alexandros Kontonikas

University of Essex ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

George N. Leledakis

Athens University of Economics and Business, School of Business, Department of Accounting and Finance ( email )

76 Patission Str.
Athens, 104 34
Greece
+30 210 8203 459 (Phone)
+30 210 8228 816 (Fax)

HOME PAGE: http://www.aueb.gr/en/faculty_page/leledakis-georgios

NICKOLAOS TRAVLOS

University of Surrey ( email )

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