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 - ESC [Rennes] - ESC Rennes School of Business, CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique
Michael Dowling: ESC Rennes School of Business - ESC [Rennes] - ESC Rennes School of Business
Jean-Jacques Lilti: CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique

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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)
Date: 2016-08
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01360952
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Published in Bankers Markets & Investors : an academic & professional review, 2016, Vol. 143 (143), pp.26-44

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