Post-Merger Performance of Bank Holding Companies, 1987-1998

Posted: 16 Aug 2005

See all articles by Alan Gart

Alan Gart

Indiana University of Pennsylvania

David Becher

Drexel University

Morris Knapp

Miami-Dade Community College - Department of Business Studies

Abstract

This paper examines the results of material mergers between bank holding companies. Merged bank holding companies experience post-merger profitability below the industry average. The market reaction to the merger announcements is significantly negative. The most important causes of the poor post-merger performance are credit quality and the inadequate generation of fee income. Asset mix and capitalization also play a major part. The controllability of these items demonstrates the management challenge associated with a material merger.

Keywords: bank mergers, mergers and acquisitions, credit quality, cost controls, asset mix

JEL Classification: G21, G34

Suggested Citation

Gart, Alan and Becher, David and Knapp, Morris, Post-Merger Performance of Bank Holding Companies, 1987-1998. The Financial Review, Vol. 40, No. 4, November 2005, Available at SSRN: https://ssrn.com/abstract=774607

Alan Gart (Contact Author)

Indiana University of Pennsylvania ( email )

Indiana, PA 15705

David Becher

Drexel University ( email )

3220 Market Street
1127 Gerri C LeBow Hall
Philadelphia, PA 19104
United States
215-895-2274 (Phone)
215-895-2295 (Fax)

Morris Knapp

Miami-Dade Community College - Department of Business Studies ( email )

300 N.E. 2nd Avenue
Miami, FL 33132
United States
305-237-3158 (Phone)
305-237-3802 (Fax)

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