Acquistion Targets and Motives in the Banking Industry

38 Pages Posted: 12 Dec 2006

See all articles by Timothy H. Hannan

Timothy H. Hannan

Board of Governors of the Federal Reserve System

Steven J. Pilloff

U.S. Financial Structure Section

Date Written: October 2006

Abstract

This paper uses a large sample of individual banking organizations, observed from 1996 to 2003, to investigate the characteristics that made them more likely to be acquired. We use a definition of acquisition that we consider preferable to that used in much of the previous literature, and we employ a competing-risk hazard model that reveals important differences that depend on the type of acquirer. Since interstate acquisitions became more numerous during this period, we also investigate differences in the determinants of acquisition between in-state and out-of-state acquirers. The hypothesis that acquisitions serve to transfer resources from less efficient to more efficient uses receives substantial support from our results, as do a number of other relevant hypotheses.

Keywords: Banking acquisitions mergers

JEL Classification: L1, G21

Suggested Citation

Hannan, Timothy and Pilloff, Steven J., Acquistion Targets and Motives in the Banking Industry (October 2006). FEDS Working Paper No. 2006-40, Available at SSRN: https://ssrn.com/abstract=951211 or http://dx.doi.org/10.2139/ssrn.951211

Timothy Hannan (Contact Author)

Board of Governors of the Federal Reserve System ( email )

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Washington, DC 20551
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202-452-2919 (Phone)
202-452-3819 (Fax)

Steven J. Pilloff

U.S. Financial Structure Section ( email )

20th and C Streets, NW
Washington, DC 20551
202-736-5622 (Phone)
202-728-5838 (Fax)

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