What Drives Acquisitions in the EU Banking Industry? The Role of Bank Regulation and Supervision Framework, Bank Specific and Market Specific Factors

Financial Markets, Institutions & Instruments, Forthcoming

Coventry University, Economics, Finance and Accounting Applied Research Working Paper Series, No. 2007-3

56 Pages Posted: 5 Jul 2007 Last revised: 27 Dec 2010

See all articles by Fotios Pasiouras

Fotios Pasiouras

GSCM-Montpellier Business School

Sailesh K. Tanna

Coventry University

Chrysovalantis Gaganis

University of Crete - Faculty of Social Sciences - Department of Economics

Abstract

We study the determinants of commercial bank acquisitions that occurred over the period 1997-2002 in the European Union single market, by evaluating the impact of bank-specific measures, such as size, growth and efficiency of banks, and external influences reflecting industry level differences in the regulatory and supervision framework, market environment and economic conditions. Our empirical analysis involves multinomial logit estimation at various levels in order to identify the characteristics that most consistently predict targets and acquirers from a sample of over 1400 commercial banks. The overall results indicate, relative to banks that were not involved in the acquisitions during 1997-2002, that (i) targets and acquirers were significantly larger, less well capitalized and less efficient in terms of expenses management, (ii) targets were less profitable with lower growth prospects, and acquirers more profitable with higher growth prospects, (iii) external factors have affected targets and acquirers differently, and their effects have not been consistent or robust to sample size changes.

Keywords: Acquisitions, Banks, EU, Mergers

JEL Classification: G21, G34

Suggested Citation

Pasiouras, Fotios and Tanna, Sailesh K. and Gaganis, Chrysovalantis, What Drives Acquisitions in the EU Banking Industry? The Role of Bank Regulation and Supervision Framework, Bank Specific and Market Specific Factors. Financial Markets, Institutions & Instruments, Forthcoming, Coventry University, Economics, Finance and Accounting Applied Research Working Paper Series, No. 2007-3, Available at SSRN: https://ssrn.com/abstract=997751

Fotios Pasiouras (Contact Author)

GSCM-Montpellier Business School ( email )

2300, Avenue des Moulins
Montpellier, 34185
France

Sailesh K. Tanna

Coventry University ( email )

Coventry
United Kingdom

Chrysovalantis Gaganis

University of Crete - Faculty of Social Sciences - Department of Economics ( email )

University Campus
Rethymno, Crete, 74100
Greece

HOME PAGE: http://economics.soc.uoc.gr/en/staff/4551/17

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