Market valuation of European bank mergers

Alireza Tourani Rad and Luuk Van Beek
Authors registered in the RePEc Author Service: Alireza Tourani-Rad

European Management Journal, 1999, vol. 17, issue 5, 532-540

Abstract: This paper examines cross-border mergers in the European banking sector in terms of their effect on their shareholders' wealth. It is found that target bank shareholders experience significant positive abnormal returns while abnormal returns to bidding bank shareholders were not significant. Furthermore, the results suggest that returns to bidding bank shareholders are more positive when the bidder is larger and more efficient. The cross-border mergers did not outperform domestic ones. Finally, there was no significant difference between mergers before the implementation of the EU-Second Banking Directive and those that took place after the implementation.

Date: 1999
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