Capital adequacy, bank mergers, and the medium of payment

Article Abstract:

A study is conducted to examine the impact of bank capital requirements on the financing of bank mergers and the response of the stock market to the merger announcement. One hundred bank mergers are analyzed in terms of the payment methods used and the change in the stock prices of the merging banks on the day of the announcement. The findings indicate that merger financing is affected by the relative sizes of both parties and the capital adequacy of the acquirer. The value of the acquiring bank's equity is found to decline after the merger announcement if the deal was paid in stock.

Author: Michaely, Roni, Swary, Itzhak, Grullon, Gustavo
Securities, Bank capital

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US evidence on bank takeover motives: a note

Article Abstract:

The relationships between target gains and total gains and between acquirer gains and target gains were investigated to differentiate the three competing motives for bank takeovers: synergy, agency and hubris. Empirical findings indicated that bank takeovers are mainly motivated by synergy, although there is also a strong indication of hubris. Hubris may account for the positive target gains and zero or negative acquirer gains.

Author: Zhang, Hao
Commercial Banking, Mergers & Acquisitions, Analysis, Commercial banks

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A new application of sustainable growth: a multi-dimensional framework of evaluating the long run performance of bank mergers

Article Abstract:

A study on mergers of bank holding companies during 1987-2000 is presented. These companies are publicly traded in United States. It is observed that sustainable growth rate of company acquiring an entity has substantial impact on the performance of the merged entity.

Author: Pagano, Michael S., Olson, Gerard T.
United States, Acquisitions & mergers, Science & research, Company acquisition/merger, Acquisitions and mergers, Growth, Company growth

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Subjects list: Research, Banking industry, Banks (Finance), Bank mergers, Mergers, acquisitions and divestments
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