Mergers of publicly traded banking organizations revisited

Robert Eisenbeis () and Simon Kwan

Economic Review, 1999, vol. 84, issue Q4, 26-37

Abstract: In more than 3,844 mergers and acquisitions between 1989 and 1999, acquiring institutions purchased more than $3 trillion in assets. A number of reasons have been advanced for such a surge in acquisitions, including the need to consolidate to achieve cost savings and operational efficiencies, to be better able to compete in the global marketplace, or to provide for the controlled exit of inefficient firms from the financial services industry. ; This article explores the question of whether the various expected performance and earning benefits of mergers are in fact realized. It adds to the limited existing research on the effects of bank mergers by analyzing consolidations between 1989 and 1996, a period of almost unprecedented banking consolidation. Specifically, examining recent data allows considering evidence of efficiency or other gains from the wave of acquisitions flowing from the erosion and final elimination of the McFadden Act. ; Consistent with the findings of earlier studies, the results point to mixed efficiency and performance effects. For example, evidence suggests that even though the better-performing institutions tended to target the higher-performing targets, the resulting mergers did not significantly improve profit performance or efficiency. In addition, the authors find only weak evidence that the market viewed acquisitions with favor. The overall conclusion is that the widely touted earnings, efficiency, and other performance and earning benefits of mergers of large banks still remain in doubt.

Keywords: Bank mergers; Financial institutions (search for similar items in EconPapers)
Date: 1999
References: Add references at CitEc
Citations: View citations in EconPapers (20)

Downloads: (external link)
https://www.frbatlanta.org/-/media/documents/resea ... 4_kwan-eisenbeis.pdf (application/pdf)

Related works:
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:fip:fedaer:y:1999:i:q4:p:26-37:n:v.84no.4

Ordering information: This journal article can be ordered from

Access Statistics for this article

More articles in Economic Review from Federal Reserve Bank of Atlanta Contact information at EDIRC.
Bibliographic data for series maintained by Meredith Rector ().