Bank Acquisitiveness and Financial Crisis Vulnerability

Saqib Aziz, Michael Dowling and Jean-Jacques Lilti
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Saqib Aziz: ESC Rennes School of Business
Michael Dowling: ESC Rennes School of Business
Jean-Jacques Lilti: University of Rennes 1, CREM (UMR CNRS 6211)

Bankers, Markets & Investors, 2016, issue 143, 26-44

Abstract: We investigate the relation between European bank acquisitiveness during the period 1990-2006 and the vulnerability of banks to the financial crisis. Our main tests use distance to default and Z-score ratios to estimate banks impact from the financial crisis in terms of bankruptcy risk and solvency. The findings shed new light on whether bank acquisitions really did contribute towards weakness; and suggest that only acquisitions of investment banking assets increased risk, while acquisition of retail banking assets actually lowered solvency risk.

Keywords: Financial Crisis; Mergers and Acquisitions; Probability of Default; Solvency; Investment Banking (search for similar items in EconPapers)
JEL-codes: G10 G21 G34 (search for similar items in EconPapers)
Date: 2016
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