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

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Author Info

  • Morris Knapp
  • Alan Gart
  • David Becher

Abstract

This paper examines the results of material mergers between bank holding companies (BHCs). Merged BHCs 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. Copyright 2005 by the Eastern Finance Association.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1540-6288.2005.00124.x
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Bibliographic Info

Article provided by Eastern Finance Association in its journal The Financial Review.

Volume (Year): 40 (2005)
Issue (Month): 4 (November)
Pages: 549-574

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Handle: RePEc:bla:finrev:v:40:y:2005:i:4:p:549-574

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Web page: http://www.easternfinance.org/
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Web: http://www.blackwellpublishing.com/subs.asp?ref=0732-8516

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Cited by:
  1. Janto Haman & Hristos Doucouliagos & Michael Graham, 2012. "Agency Problem II and Convergence in CEO Pay," Economics Series 2012_5, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
  2. Maretno Harjoto & Ha-Chin Yi & Tosporn Chotigeat, 2012. "Why do banks acquire non-banks?," Journal of Economics and Finance, Springer, vol. 36(3), pages 587-612, July.
  3. Jens Hagendorff & Maria J. Nieto & Larry D. Wall, 2012. "The safety and soundness effects of bank M&A in the EU," Working Paper 2012-13, Federal Reserve Bank of Atlanta.
  4. Jens Hagendorff & María J. Nieto & Larry D. Wall, 2012. "The safety and soundness effects of bank M&As in the EU: does prudential regulation have any impact?," Banco de Espa�a Working Papers 1236, Banco de Espa�a.
  5. Hristos Doucouliagos & Saeed Askary & Janto Haman, 2006. "Directors' Remuneration and Performance in Australian Banking," Economics Series 2006_11, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
  6. Ana Lozano-Vivas & Subal Kumbhakar & Meryem Fethi & Mohamed Shaban, 2011. "Consolidation in the European banking industry: how effective is it?," Journal of Productivity Analysis, Springer, vol. 36(3), pages 247-261, December.
  7. Al-Khasawneh, Jamal Ali & Essaddam, Naceur, 2012. "Market reaction to the merger announcements of US banks: A non-parametric X-efficiency framework," Global Finance Journal, Elsevier, vol. 23(3), pages 167-183.
  8. John Goddard & Donal McKillop & John Wilson, 2009. "Which Credit Unions are Acquired?," Journal of Financial Services Research, Springer, vol. 36(2), pages 231-252, December.

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