The Impact of Merger Legislation on Bank Mergers

46 Pages Posted: 21 May 2016 Last revised: 9 Jul 2016

See all articles by Elena Carletti

Elena Carletti

Bocconi University - Department of Finance; European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS)

Steven Ongena

University of Zurich - Department Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR)

Jan-Peter Siedlarek

Federal Reserve Bank of Cleveland

Giancarlo Spagnolo

University of Rome Tor Vergata; EIEF; Centre for Economic Policy Research (CEPR); Stockholm School of Economics (SITE)

Multiple version iconThere are 2 versions of this paper

Date Written: May 18, 2016

Abstract

We find that stricter merger control legislation increases abnormal announcement returns of targets in bank mergers by 7 percentage points. Analyzing potential explanations for this result, we document an increase in the pre-merger profitability of targets, a decrease in the size of acquirers and a decreasing share of transactions in which banks are acquired by other banks. Other merger properties, including the size and risk profile of targets, the geographic overlap of merging banks and the stock market response of rivals appear unaffected. The evidence suggests that the strengthening of merger control leads to more efficient and more competitive transactions.

Keywords: banks; mergers and acquisitions; merger control; antitrust

JEL Classification: G21, G34, K21, L40

Suggested Citation

Carletti, Elena and Ongena, Steven R. G. and Siedlarek, Jan-Peter and Spagnolo, Giancarlo, The Impact of Merger Legislation on Bank Mergers (May 18, 2016). Swiss Finance Institute Research Paper No. 16-33, Available at SSRN: https://ssrn.com/abstract=2782040 or http://dx.doi.org/10.2139/ssrn.2782040

Elena Carletti

Bocconi University - Department of Finance ( email )

Via Roentgen 1
Milano, MI 20136
Italy

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )

Villa La Fonte, via delle Fontanelle 18
50016 San Domenico di Fiesole
Florence, Florence 50014
Italy

Steven R. G. Ongena

University of Zurich - Department Finance ( email )

Schönberggasse 1
Zürich, 8001
Switzerland

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

NTNU Business School ( email )

Norway

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Jan-Peter Siedlarek (Contact Author)

Federal Reserve Bank of Cleveland ( email )

East 6th & Superior
Cleveland, OH 44101-1387
United States

Giancarlo Spagnolo

University of Rome Tor Vergata ( email )

Faculty of Economics - DEF
Via Columbia 2
Rome, RM 00133
Italy

EIEF ( email )

Via Due Macelli, 73
Rome, 00187
Italy

HOME PAGE: http://WWW.EIEF.IT

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Stockholm School of Economics (SITE) ( email )

P.O. Box 6501
Stockholm
Sweden

HOME PAGE: http://https://sites.google.com/site/giancarlospagnoloshomepage/

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
237
Abstract Views
1,843
Rank
121,388
PlumX Metrics