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Do regulatory bank mergers improve operating performance?

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  • Mamun, Abdullah
  • Tannous, George
  • Zhang, Sicong

Abstract

We analyze the post-merger operating performance of FDIC-assisted bank mergers (regulatory mergers) during and after the 2008–09 financial crisis. Regulatory mergers experience significant improvements in profitability and cost efficiency up to two years following the transaction. These improvements are significantly higher than those experienced by non-merger peers. In contrast, the post-merger operating performance of nonregulatory mergers is not significantly different from the performance of their non-merger peers. For regulatory mergers, the wealth that may have been transferred from the FDIC to the acquirers as incentives for the mergers is not a significant factor in determining the operating performance improvements.

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  • Mamun, Abdullah & Tannous, George & Zhang, Sicong, 2021. "Do regulatory bank mergers improve operating performance?," International Review of Economics & Finance, Elsevier, vol. 73(C), pages 152-174.
    • Handle: RePEc:eee:reveco:v:73:y:2021:i:c:p:152-174
    DOI: 10.1016/j.iref.2020.12.036
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    3. Chiaramonte, Laura & Dreassi, Alberto & Piserà, Stefano & Khan, Ashraf, 2023. "Mergers and acquisitions in the financial industry: A bibliometric review and future research directions," Research in International Business and Finance, Elsevier, vol. 64(C).

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    More about this item

    Keywords

    Regulatory bank mergers; Operating performance; Return on assets; Cost-income ratio;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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