Bank Consolidation and Performance: The Argentine Experience

International Monetary Fund

No 2004/149, IMF Working Papers from International Monetary Fund

Abstract: We examine a large panel of more than 100 banks from Argentina to study the effects of bank consolidation on performance between December 1995 and December 2000, a period of heavy bank consolidation and relative calm. Overall, we find a positive and significant effect of bank consolidation on bank performance. Bank returns increase with consolidation, and insolvency risk is reduced. Additionally, the study suggests that mergers and privatizations have a beneficial effect on bank returns. The effects of a bank acquisition on return on equity is, however, negative. Acquisitions do not seem to have any effect on risk-adjusted returns. The study also finds that a bank's insolvency risk is reduced significantly through mergers and privatization and is unrelated to bank acquisitions.

Keywords: WP; bank consolidation; insolvency risk; bank return; bank merger dummy variable; performance indicator (search for similar items in EconPapers)
Pages: 32
Date: 2004-08-01
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Citations: View citations in EconPapers (4)

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