The success of bank mergers revisited. An assessment based on a matching strategy

Andreas Behr and Frank Heid

Journal of Empirical Finance, 2011, vol. 18, issue 1, 117-135

Abstract: The question of whether or not mergers and acquisitions have helped to enhance banks' efficiency and profitability has not yet been conclusively resolved in the literature. We argue that this is partly due to severe methodological problems involved. In this study we analyze the effect of German bank mergers from the period 1995-2000 on the banks' profitability and cost efficiency. We suggest a new matching strategy to control for the selection effects arising from the fact that pre-dominantly under-performing banks engage in mergers. Our results indicate a neutral effect of mergers on profitability and cost efficiency. Comparing our results with those obtained from a naive performance comparison of merging and non-merging banks indicates a severe negative selection bias with regard to the latter.

Keywords: Bank; mergers; Efficiency; Profitability; Propensity; score; matching; Performance; measurement; Merger; success (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (30)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0927-5398(10)00060-5
Full text for ScienceDirect subscribers only

Related works:
Working Paper: The success of bank mergers revisited: an assessment based on a matching strategy (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:empfin:v:18:y:2011:i:1:p:117-135

Access Statistics for this article

Journal of Empirical Finance is currently edited by R. T. Baillie, F. C. Palm, Th. J. Vermaelen and C. C. P. Wolff

More articles in Journal of Empirical Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().