Diversification versus Specialisation: An Event Study of M&As in the European Banking Industry

Laetitia Lepetit, Stéphanie Patry () and Philippe Rous ()
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Stéphanie Patry: LAPE - Laboratoire d'Analyse et de Prospective Economique - GIO - Gouvernance des Institutions et des Organisations - UNILIM - Université de Limoges
Philippe Rous: LAPE - Laboratoire d'Analyse et de Prospective Economique - GIO - Gouvernance des Institutions et des Organisations - UNILIM - Université de Limoges

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Abstract: This study examines the stock market valuation in terms of expected gains of mergers and acquisitions (M&As) amongst banks that were announced from 1991 to 2001 in 13 European markets. We classify M&As according to activity, geographic specialisation or diversification. A Bivariate GARCH model is used to estimate abnormal returns taking beta variability into account. Our results document that there is, on average, a positive and significant increase in value for the group of targets' banks. Moreover, we find that on average there is a positive and significant market reaction for the two types of transactions: cross-product diversification and geographic specialisation.

Keywords: European Banks Mergers and Acquisitions; Bivariate GARCH; Abnormal Returns (search for similar items in EconPapers)
Date: 2004
Note: View the original document on HAL open archive server: https://unilim.hal.science/hal-00804954v1
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Citations: View citations in EconPapers (12)

Published in Applied Financial Economics, 2004, 14 (9), pp.663-669. ⟨10.1080/0960310042000233430⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00804954

DOI: 10.1080/0960310042000233430

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