The impact of mergers and acquisitions on the performance of Greek Banking Sector

Panagiotis Liargovas and Spyridon Repousis

No 51, Working Papers from University of Peloponnese, Department of Economics

Abstract: The Greek banking landscape has experienced substantial changes and restructuring since the mid 1990s. This paper examines the financial performance and the implications of Greek banks’ mergers and acquisitions that took place during the period 1996-2009. With the use of event study methodology, we reject the “semi-strong form” of Efficient Market Hypothesis (EMH) of the Athens Stock Exchange, possibly reflecting leakage of information. We find that ten days prior to the announcement of a merger and acquisition, shareholders receive considerable and significant positive cumulative average abnormal returns (CAARs), which are more significant in the case of cash deals compared to stock deals. Also the results show that significant positive CAARs are gained upon the announcement of horizontal and diversifying bank deals. The overall results (the weighted average of gains to the bidder and to the target bank) indicate that bank mergers and acquisitions have no impact and do not create wealth. We also examine operating performance by estimating twenty financial ratios. Findings show that operating performance does not improve, following mergers and acquisitions. There are also controversial results when comparing merged to non-merged banks. index.

Keywords: Banks; M&As; Event Study; Operating Performance (search for similar items in EconPapers)
Pages: 24 pages
Date: 2010
New Economics Papers: this item is included in nep-ban, nep-com and nep-eff
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