Bank M&A in Central and Eastern Europe

Abstract

We study abnormal returns for bidding banks of 56 cross-border M&A transactions that occurred between 1990 and 2005 that involved target banks from Central and Eastern European (CEE) and bidder banks from Western European countries and the US. Furthermore we determine success factors of the M&A deals with a special focus on emerging market characteristics. Our results show that country and deal specific factors have significant explanatory power for excess returns to the bidding bank's shareholder. Low economic freedom and thus high regulation as well as low GDP growth in the target markets are key factors for value creation.

Keywords: European banks, event study, bank mergers

JEL Classification: G14, G24, G21, G34