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The Static and Dynamic Effects of Mergers and Acquisitions on Productivity in The period Post-Subprime Crisis: An Empirical Application to the Banking Sector in the European Union

Hassen Toumi (), Fakhri Issaoui (), Bilel Ammouri () and Wassim Touili ()
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Hassen Toumi: University of Economics and Management of Sfax, Tunisia
Fakhri Issaoui: College of Business Administration, Majmaa University, Saudi Arabia
Wassim Touili: Ecole Supérieure de Commerce de Tunis ESCT, Tunisia

Economic Research Guardian, 2015, vol. 5, issue 2, 143-158

Abstract: This article aims to detect the dynamic effect of M&A of European banks on productivity during the period from 2005 to 2013. The estimation of our model by the GMM method allowed us to detect the following results. First, in the long term, the European banking structure seems to be submitted to the divergence phenomenon which means that the banking industry will probably governed by monopolistic structures which will share the market equally or nearly equal. Second, the production factors(labour and capital) have had positive and significant effects on the banking product. However, the returns to scale are found to be decreasing as long as the sum of the labour coefficient (0.243) of fixed assets (0.16) and liquid assets (0.351) is less than unity. Third, the time had exerted a negative and significant effect on production which questions the validity of the chosen period characterized by the advent of the subprime crisis. Fourthly, the M&A had a significant positive effect on production which affirm that in a pessimistic environment; it seems that the M&A strategies can be effective solutions to overcome the crisis.

Keywords: M&A; Productivity; Dynamic effects; GMM (search for similar items in EconPapers)
JEL-codes: G15 G21 G24 (search for similar items in EconPapers)
Date: 2015
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