THE IMPACT OF THE SUBPRIME CRISIS ON THE COURSE OF CROSS-BORDER CONSOLIDATION PROCESSES

Alina Gorczynska
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Alina Gorczynska: Silesian University of Technology, Poland

Equilibrium. Quarterly Journal of Economics and Economic Policy, 2011, vol. 6, issue 2, 7-21

Abstract: The subprime crisis limited the investment activities of economic entities. The manifestation of the crisis was the decrease in the quantity and value of cross-border consolidation processes. These trends were especially visible in the developed countries. The main reasons for the reduction of mergers and acquisitions were the restrictions of access to external capital due to the collapse of stock markets, banks crash, the decline of private equity activity and decrease of the financial health of businesses as well as market pessimism. In addition to reduction and therefore cancellation of several mergers and acquisitions, these factors forced certain actions upon the consolidating companies. Among other things, they led to restructuring activities aimed at reducing costs. They also contributed to a number of divestments. Since the second half of 2009, there has been a noticeable improvement of the financial situation of enterprises, as well as of general economic indicators (GDP). However, these phenomena are still accompanied by unregulated financial markets situation, inter alia, concerning the regulation limiting the emergence of financial crises, including relation to the activities of private equity funds. Therefore, it is difficult to determine whether the period of crisis in relation to transactions of consolidation is over, and if we can talk about recovery in the course of these processes.

Keywords: consolidation processes; subprime crisis; conduct of business entities during the crisis (search for similar items in EconPapers)
JEL-codes: G (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (1)

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