Regulations, Supervision Approaches and Acquisition Likelihood in the Asian Banking Industry

University of Bath School of Management, Working Paper Series No. 2006.19

43 Pages Posted: 27 Jan 2007 Last revised: 5 Feb 2008

See all articles by Fotios Pasiouras

Fotios Pasiouras

GSCM-Montpellier Business School

Chrysovalantis Gaganis

University of Crete - Faculty of Social Sciences - Department of Economics

C. Zopounidis

Technical University of Crete (TUC) - Department of Production Engineering and Management

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Date Written: Bath School of Management, WP 2006.19

Abstract

We investigate the association between the regulatory and supervision framework and the acquisition likelihood in the Asian banking industry. The sample consists of 472 commercial banks operating in 9 South and Southeastern Asian countries, from which 52 were acquired between 1998 and 2004, resulting in a total of 2,568 yearly observations. We use information from the new database of the World Bank and examine various regulations such as the level of accounting and information disclosure requirements, the degree of official disciplinary power, the degree of diversification requirements/guidelines, the existence of deposit insurance schemes, the restrictions on bank activities, and capital adequacy requirements. We estimate various specifications of a logistic regression model with the supervisory variables examined sequentially, while controlling for bank-specific and country-specific characteristics. The results indicate that several of the regulatory and supervision approaches have an impact on the acquisition likelihood. From the bank-specific control variables, only the size and the profitability of banks are statistically significant in cases. As it concerns the country-specific control variables, the results indicate that the real GDP growth, the activity in the banking sector, the financial deepening, and the percentage of government owned banks are statistically significant in all the specifications.

Keywords: Acquisitions, Asia, Banks, Regulations, Supervision

JEL Classification: G21, G28, G34

Suggested Citation

Pasiouras, Fotios and Gaganis, Chrysovalantis and Zopounidis, Constantin, Regulations, Supervision Approaches and Acquisition Likelihood in the Asian Banking Industry (Bath School of Management, WP 2006.19). University of Bath School of Management, Working Paper Series No. 2006.19, Available at SSRN: https://ssrn.com/abstract=959441 or http://dx.doi.org/10.2139/ssrn.959441

Fotios Pasiouras (Contact Author)

GSCM-Montpellier Business School ( email )

2300, Avenue des Moulins
Montpellier, 34185
France

Chrysovalantis Gaganis

University of Crete - Faculty of Social Sciences - Department of Economics ( email )

University Campus
Rethymno, Crete, 74100
Greece

HOME PAGE: http://economics.soc.uoc.gr/en/staff/4551/17

Constantin Zopounidis

Technical University of Crete (TUC) - Department of Production Engineering and Management ( email )

University Campus
Chania
Crete, 73100
Greece
+30 28210 37236 (Phone)
+30 28210 69410, 37236 (Fax)

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