Cross-Border Bank Mergers: Who Gains and Why?

38 Pages Posted: 16 Aug 2006

Date Written: July 2006


This paper examines the announcement effect of 96 international cross-border bank mergers between 1985 and 2005. Contrary to earlier evidence, transactions are found to be value-creating, albeit only on a net basis with target gains more than compensating for bidder losses. An inquiry into the determinants of abnormal returns reveals that bidders create most value when they take over targets that lack stand-alone growth prospects but are already relatively cost efficient ex-ante. As predicted by international management theory, bidder and target returns are also determined by country-specific factors. Finally, evidence suggests that announcements during hot M&A markets reduce bidder and net wealth.

Keywords: Banks, Mergers, Market Reaction, International Business

JEL Classification: G14, G21, G34, F23

Suggested Citation

Schmautzer, Dirk, Cross-Border Bank Mergers: Who Gains and Why? (July 2006). Available at SSRN: or

Dirk Schmautzer (Contact Author)

University of Münster ( email )

Schlossplatz 2
Muenster, D-48149

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