The Nexus between Bank M&As and Financial Development

Alin Marius Andrieș, Sabina Cazan and Nicu Sprincean
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Sabina Cazan: Alexandru Ioan Cuza University of Iași, Bvd Carol I, no. 22, Iasi, Romania

Journal for Economic Forecasting, 2022, issue 2, 5-28

Abstract: The financial system plays an important role in assuring the overall wellbeing of a nation, being fundamental to the growth mechanism of an economy. The consolidation and liberalization process in the past years has increased the scrutiny and the attention over the banking sector. Even if the mergers and acquisitions (M&As) are recognized as an important instrument of growth and power, little is still known about the implications on the economic evolution of the emerging markets. This article aims to investigate the link between banks M&As and the financial development of 16 countries from Central and Eastern Europe. From this perspective, a panel regression model that employs data of 213 restructuring operations from 2000 to 2018 was conducted. The empirical results show that there is a negative and significant connection between the pace of financial development and the dynamic of the banking system on short term, whereas we document a positive impact on long term, especially in the case of cross-border M&As. Thus, the materialization of a restructuring operation could affect the depth, access and efficiency of the banking system. Furthermore, the analysis provides evidence on the importance of cumulative cross-border transactions before and after the global financial crisis.

Keywords: banks; mergers and acquisitions; financial development (search for similar items in EconPapers)
JEL-codes: G21 G34 O16 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:rjr:romjef:v::y:2022:i:2:p:5-28

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