Takeover activity among financial mutuals: an analysis of target characteristics

Article Abstract:

The study explored the acquisition process of mutual financial companies in the absence of a hostile takeover market and utilized a combined cross section/time series sample of UK building societies between the period 1981 to 1993. It also investigated the mutual merger process by exploring target characteristics. The study showed that little support for the natural selection mechanism for mutual merger activity, which corresponds to the market for corporate control, but it indicated the significance of the regulatory process on merger activity.

Financial Corporations, Savings & Loan Assns, Savings Institutions, Acquisitions & Mergers Analysis, Analysis, Acquisitions and mergers, Savings and loan associations, Financial analysis

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Investment opportunities and corporate demand for lines of credit

Article Abstract:

A model is used to represent the reactions of a risk neutral firm in choosing a line of credit which are influenced by an indefinite future need for cash due to the stochastic arrival of investment opportunities. The firm employs credit lines, which allows quick movement and secrecy, to gain advantages over competitors. Results reveal that credit line demand significantly influences a firm's opportunities for growth but does not seem to be related to unpredictability in its business prospects.

Credit Management, Debt Management-Bank Loans, Bank management, Bank loans, Loan servicing

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Is there an optimal size for the financial sector?

Article Abstract:

A new study derives a model of the economy using a general equilibrium framework similar to that devised by Holmstrom and Tirole. It is shown that the financial sector has an optimal size independent of the state of the economy, which remains unvaried over the business cycle.

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