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Interstate Banking Deregulation And The Changing Nature Of Bank Mergers

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  • David A. Becher
  • Terry L. Campbell

Abstract

We examine a sample of 443 bank mergers between publicly traded banks announced during the 1990s to investigate empirically the role of full interstate banking deregulation. The pre-deregulation 1990s are characterized by value creation, with mergers involving a high degree of branch overlap experiencing significant announcement gains. Bank mergers in the post-deregulation 1990s, however, fail to create value, and mergers with a high degree of branch overlap actually experience significant losses. Consistent with prior research, these valuation consequences are magnified for large bank mergers in the 1990s. Overall, our results are consistent with the broader literature on corporate control, suggesting that an economic shock can materially alter industry structure and the economic rationale for the efficient reallocation of assets through merger activity. 2005 The Southern Finance Association and the Southwestern Finance Association.

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Bibliographic Info

Article provided by Southern Finance Association & Southwestern Finance Association in its journal Journal of Financial Research.

Volume (Year): 28 (2005)
Issue (Month): 1 ()
Pages: 1-20

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Handle: RePEc:bla:jfnres:v:28:y:2005:i:1:p:1-20

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Web page: http://www.southwesternfinance.org/
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Cited by:
  1. Valkanov,Emil & Kleimeier,Stefanie, 2005. "The Role of Regulatory Capital in International Bank Mergers and Acquisitions," Research Memorandum 017, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  2. Julapa Jagtiani, 2008. "Understanding the effects of the merger boom on community banks," Economic Review, Federal Reserve Bank of Kansas City, issue Q II, pages 29-48.
  3. Cornett, Marcia Millon & Fayman, Alex & Marcus, Alan J. & Tehranian, Hassan, 2011. "Dividends, maturity, and acquisitions: Evidence from a sample of bank IPOs," Review of Financial Economics, Elsevier, vol. 20(1), pages 11-21, January.
  4. Robert DeYoung & Douglas Evanoff & Philip Molyneux, 2009. "Mergers and Acquisitions of Financial Institutions: A Review of the Post-2000 Literature," Journal of Financial Services Research, Springer, vol. 36(2), pages 87-110, December.
  5. Alessandrini, Pietro & Calcagnini, Giorgio & Zazzaro, Alberto, 2008. "Asset restructuring strategies in bank acquisitions: Does distance between dealing partners matter?," Journal of Banking & Finance, Elsevier, vol. 32(5), pages 699-713, May.

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