Can mergers in Europe help banks hedge against macroeconomic risk?
Pierre-Guillaume Méon and
Laurent Weill
Applied Financial Economics, 2005, vol. 15, issue 5, 315-326
Abstract:
This study investigates the motive of geographic risk diversification in the lending activity for bank mergers in the EU on a sample of large banking groups. Geographic diversification should allow banks to reduce their risk. It is observed that the loan portfolios of European banks are home-biased. The portfolio approach is applied to explore the risk-return efficiency of the locations of banks' activities. Mergers between pairs of banks are also studied. Evidence of the sub-optimality of the loan portfolios of European banks in terms of geographic risk diversification, and of the existence of potential gains from inter-country pair mergers is also provided.
Date: 2005
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Working Paper: Can mergers in Europe help banks hedge against macroeconomic risk? (2005) 
Working Paper: Can Mergers in Europe Help Banks Hedge Against Macroeconomic Risk (2003) 
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DOI: 10.1080/0960310042000323629
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