Can mergers in Europe help banks hedge against macroeconomic risk?

Pierre-Guillaume Méon and Laurent Weill

No in, DULBEA Working Papers from ULB -- Universite Libre de Bruxelles

Abstract: This paper 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. We observe that the loan portfolios of European banks are home-biased. We apply the portfolio approach to explore the risk-return efficiency of the locations of banks’ activities. We also study mergers between pairs of banks. We provide 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.

Keywords: bank mergers; risk diversification; European integration (search for similar items in EconPapers)
JEL-codes: F15 G11 G21 G34 (search for similar items in EconPapers)
Pages: 27 p.
Date: 2005-02
New Economics Papers: this item is included in nep-eec, nep-fin, nep-fmk and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (38)

Published by: DULBEA - Université libre de Bruxelles, Bruxelles

Downloads: (external link)
https://dipot.ulb.ac.be/dspace/bitstream/2013/8440/1/pgm-0044.pdf pgm-0044 (application/pdf)

Related works:
Journal Article: Can mergers in Europe help banks hedge against macroeconomic risk? (2005)
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)
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:dul:wpaper:05-08rs

Ordering information: This working paper can be ordered from
http://hdl.handle.ne ... .ulb.ac.be:2013/8440

Access Statistics for this paper

More papers in DULBEA Working Papers from ULB -- Universite Libre de Bruxelles Contact information at EDIRC.
Bibliographic data for series maintained by Benoit Pauwels ().